Core Insights - Nvidia reported Q2 FY2026 revenue of $46.7 billion, exceeding market expectations of $46.1 billion, and representing a 55% year-over-year growth [1][2] - The company's net profit was $26.4 billion, a 60% increase year-over-year, translating to an EPS of $1.04, also above the expected $1.01 [1] - Despite the strong financial results, Nvidia's stock experienced a decline, dropping 0.09% to $181.6 per share, with a post-earnings drop exceeding 5% at one point [1][2] Financial Performance - Nvidia's gross margin decreased to 72.4% in Q2 from 75.2% in the same period last year, although it remains significantly higher than the pre-ChatGPT average of around 60% [1] - The data center segment, a key growth driver, reported revenue of $41.1 billion, a 56% year-over-year increase, but fell short of the market expectation of $41.34 billion [3] - For Q3, Nvidia projects revenue of $54 billion with a gross margin between 73.3% and 73.5%, indicating a potential slowdown in growth compared to previous quarters [3] Geopolitical Factors - A significant geopolitical factor affecting Nvidia is the restriction on H20 chip sales to China, which has impacted revenue and led to a $4.5 billion loss in Q1 due to inventory write-downs and order cancellations [4][5] - Although the U.S. government has decided to restore H20 exports to China, Nvidia has yet to realize any revenue from these sales, despite some Chinese customers obtaining licenses [4][5] - Nvidia confirmed approximately $650 million in revenue from H20 sales to non-restricted customers outside China, but has not sold any H20 products to Chinese clients [5] Market Outlook - Nvidia's CEO highlighted the ongoing demand for AI infrastructure, estimating that spending in this area could reach $3 trillion to $4 trillion by 2030 [6][7] - The company is focusing on the AI infrastructure market, with significant growth opportunities anticipated, particularly with the upcoming Blackwell AI platform [6] - Analysts suggest that Nvidia's future performance will depend on factors such as customer demand, supply chain dynamics, long-term revenue, and geopolitical conditions [7]