Nvidia stock slipped Thursday after the artificial intelligence leader disappointed with its current-quarter guidance, which includes no AI chip sales to China.
Nvidia executives cited U.S. regulatory and "geopolitical issues" for the lack of China sales expected in the October quarter. Analysts say the geopolitical issues are likely a reference to Chinese authorities pressuring domestic companies to not buy Nvidia chips.
Nvidia Chief Financial Officer Colette Kress also said the company's arrangement with the Trump administration to give the U.S. government a 15% cut of AI chip sales to China hasn't been codified in regulations yet.
If Nvidia can clear up those issues, it could ship $2 billion to $5 billion of H20 chips to China this quarter, she said.
On the stock market today, Nvidia stock fell 0.8% to close at 180.17. In late trading Wednesday, Nvidia stock was down more than 3%.
Still, at least 10 Wall Street analysts raised their price targets on Nvidia stock after the report.
Nvidia Beats Fiscal Q2 Targets
The Santa Clara, Calif.-based company beat expectations for its fiscal second quarter ended July 27. It earned an adjusted $1.05 a share, up 54% year over year, on sales of $46.74 billion, up 56%. Analysts polled by FactSet had expected Nvidia to earn an adjusted $1.01 a share on sales of $46.05 billion in fiscal Q2.
For the current quarter, Nvidia forecast revenue of $54 billion, vs. expectations for $53.43 billion. That would represent a year-over-year increase of 54%.
But analysts said Nvidia was being conservative with its outlook, given the China uncertainty.
"Overall the results were good, though with the guide perhaps just a hair light of the latest whispers," Bernstein analyst Stacy Rasgon said in a client note. The company's roughly in-line data center sales outlook was due to "continued messy China dynamics," he said.
Rasgon reiterated his outperform rating on Nvidia stock and upped his price target to 225 from 185.
China Remains An Overhang For Nvidia Stock
Meanwhile, Nvidia is seeking U.S. government permission to sell an upgraded AI processor to China based on its Blackwell platform. The H20 is based on the company's prior-generation Hopper platform.
"Management's characterization of China as a $50 billion annual opportunity and 'real possibility' for Blackwell approval suggests optimism, though there remains much uncertainty until official licensing clarity emerges," Rosenblatt Securities analyst Kevin Cassidy said in a client note.
Cassidy maintained his buy rating on Nvidia stock and raised his price target to 215 from 200.
William Blair analyst Sebastien Naji said the China uncertainly clouded strong results for Nvidia. He rates Nvidia stock as outperform with a fair value of 212.
"While China revenue remains an overhang, Nvidia is benefiting from robust data center growth stemming from growing demand for compute," Naji said in a client note. "We see room for Nvidia to maintain robust growth, underpinned by continued hyperscaler spending as well as accelerating momentum from neocloud, sovereign, and even enterprise customers."
Huang In Talks With Trump Administration
On a conference call with analysts, Nvidia Chief Executive Jensen Huang said he has been in discussions with the Trump administration about opening the China chip market to U.S. companies.
"We're talking to the administration about the importance of American companies to be able to address the Chinese market," Huang said. "We just have to keep advocating the sensibility of and the importance of American tech companies to be able to lead and win the AI race and help make the American tech stack the global standard."
Truist Securities analyst William Stein said investors focused on the China situation are missing the bigger picture. Stein kept his buy rating on Nvidia stock and increased his price target to 228 from 210.
"Let's not overreact to these minor negatives. Nvidia's position as the main merchant infrastructure supplier of AI technology appears to be well intact, and demand does not appear to be waning," he said in a client note.
Nvidia Still 'The Only Game In Town'
Wedbush Securities analyst Daniel Ives concurred.
"We view any decline in Nvidia stock to be a clear buying opportunity as Nvidia remains the only game in town fueling this 4th Industrial Revolution that continues to accelerate with the company well on its way to hitting a $5 trillion market cap by early 2026," Ives said in a client note. Nvidia's current market capitalization is about $4.4 trillion.
Nvidia's latest top-of-the-line AI processor is the GB300, known as Blackwell Ultra. The company plans to release its next-generation Rubin family of processors next year.
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