[News] NVIDIA Growth Risk Looms as Revenue Expansion Hits Two-Year Low, China Hurdles Cloud Outlook

Is NVIDIA’s record-breaking AI run starting to crack? Revenue jumped 56% to $46.7 billion in the quarter ending in July, but that was its slowest growth in over two years, Bloomberg and CNBC note. Analysts cited by the reports caution that cloud giants may be easing data center expansion, while China’s H20 export hurdles linger—two headwinds now dimming the U.S. chip giant’s momentum.

Adjusted profit came in at $1.05 per share in the July quarter, beating Wall Street’s $1.01 estimate, according to Bloomberg.

NVIDIA forecasts about $54 billion in sales for the October quarter, matching Wall Street’s average view but falling short of some bullish calls for $60 billion, as per Bloomberg. Notably, the report points out that the guidance excludes China data center sales, where U.S. curbs and Beijing’s pressure continue to weigh.

H20 Update

According to NVIDIA, there were no H20 sales to China-based customers in the previous quarter. However, it did benefit from a $180 million release of previously reserved H20 inventory, from approximately $650 million in unrestricted H20 sales to a customer outside of China.

As Bloomberg notes, NVIDIA has flagged fresh uncertainty over China sales, noting Washington hasn’t finalized a plan to claim 15% of AI chip revenue—a move the company warned could spark lawsuits, raise costs, and hand rivals an edge. The chipmaker estimates $2-5 billion worth of H20 could still head to China, but shipments hinge on U.S. licenses, with only a handful of customers cleared so far, the report adds.

NVIDIA faces added risk as China aggressively boosts domestic AI chip production. Financial Times reports that Chinese chipmakers plan to triple AI processor output in 2026 as Beijing races the U.S. for AI dominance. A fab for Huawei’s AI chips could start by year-end, with two more set to launch next year, sources say.

Data Center Sales Show Signs of Caution

On the other hand, NVIDIA’s data center unit posted $41.1 billion in sales in the July quarter, slightly shy of the $41.3 billion expected, Bloomberg notes.

Analysts cited by the report flagged potential caution among major data center operators, adding that spending could tighten at the margins if near-term AI returns remain hard to quantify.

Reuters, citing NVIDIA CFO Colette Kress, suggests that about half of the company’s data center revenue last quarter came from major cloud providers. Kress also said NVIDIA’s “sovereign AI” push—selling AI chips and software to governments—is on track to bring in $20 billion this year, as per Reuters. The report adds that AI-related spending could drive $3-4 trillion in infrastructure investment by decade’s end, with $600 billion already spent so far in 2025.

Notably, CNBC, citing Kress, notes that $33.8 billion of NVIDIA’s data center revenue came from GPUs, down 1% from Q1FY26 due to $4 billion fewer H20 chip sales. Meanwhile, networking components, used in more complex systems, brought in $7.3 billion in the July quarter—nearly double last year’s figure, the report adds.

CNBC also notes that Blackwell sales, the company’s new product line launched in May, rose 17% from Q1 and have reached $27 billion, accounting for roughly 70% of data center revenue.

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(Photo credit: NVIDIA’s X)