Nvidia Q2: Another Strong Quarter, But Perfection Is a High Bar

Nvidia has been the undisputed leader of the AI boom, powering the data centers and cloud providers that are reshaping global technology. Q2 2025 results once again delivered strong growth, though subtle cracks in the story are beginning to show.

📊 The Numbers at a Glance

• Revenue: $46.7B (beat $46.2B)

• EPS: $1.05 (beat $1.01)

• Data Center: $41.1B (slight miss of $41.2B)

• Gaming: $4.3B (beat $3.8B)

• Operating Income: $30.17B (beat $29.36B)

  
  

Execution remains excellent, though even a minor miss in data center revenues raised eyebrows given markets expect flawless AI demand.

🔎 Strengths

• Momentum: Revenue and profitability continue to scale impressively.

• Gaming comeback: GPUs surprised to the upside, +13% versus expectations.

• Efficiency: EPS strength reflects cost discipline and operating leverage.

  
  

⚠️ Weak Spots

• Data center slip: A small miss in Nvidia’s core engine is symbolically important.

• Concentration risk: 88% of revenue comes from AI infrastructure, leaving the company exposed if enterprise AI capex slows.

• Valuation: At current multiples, even minor disappointments can lead to sharp stock reactions.

• Geopolitics: U.S.–China frictions and export restrictions remain a structural overhang.

  
  

🔍 The China Puzzle

Recent reports suggested Nvidia and AMD struck a deal with President Trump to share 15% of Chinese chip revenues with the U.S. government in exchange for lighter export controls. Yet Nvidia’s CFO clarified no such regulation has been finalized.

Despite selling zero H20 chips to China in Q2, Nvidia still generated $2.8B from China through non-restricted products like networking hardware, gaming GPUs, and robotics compute. This was a sharp increase from ~$900M in these categories in Q1, evidence of relentless demand.

Looking ahead, Nvidia guides record Q3 revenues of $54B without assuming any China H20 sales. If restrictions ease, upside could be significant.

📌 Big Picture

Nvidia remains the backbone of the AI economy, with margins near 74% and growth still accelerating. The fact that it continues to beat expectations without its core China product line is quietly the most bullish sign yet.

But at these valuations, the margin for error is thin. Investors must weigh the enormous structural tailwind in AI against risks from geopolitics, competition, and concentration.

💡 Takeaway for Investors

• Nvidia is still a best-in-class franchise with world-leading execution.

• AI demand is real, and Nvidia is at its center.

• But with the stock priced for perfection, portfolio sizing and risk management are key.

  
  

In short: This quarter underscores Nvidia’s resilience, strong results despite zero H20 sales in China, with meaningful upside if restrictions ease.