NVDA Stock Uptrend Tested Despite Nvidia CEO-US Govt Talks on China Chip Sales
Despite record-breaking profitability, export limitations and policy risks overshadow NVIDIA's strong Q2 performance, making investors wary.
Quick overview
- NVIDIA reported impressive Q2 earnings with a 56% year-over-year revenue increase, but market sentiment remains cautious due to export restrictions and policy risks.
- Despite strong financial results, including a net income of $26.42 billion, the stock has faced volatility and is currently trading below its previous highs.
- The company's Q3 outlook projects approximately $54 billion in revenue, reaffirming its leadership in AI and data centers, but rising costs are a concern.
- Technical indicators suggest potential further downside if the stock fails to reclaim the 20-day simple moving average, with a retest of $153 possible.
Live NVDA Chart
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Despite record-breaking profitability, export limitations and policy risks overshadow NVIDIA’s strong Q2 performance, making investors wary.
CEO Jensen Huang Confirms Early Dialogue Amid National Security Debate
Nvidia CEO Jensen Huang confirmed that the company has begun early discussions with the Trump administration regarding the potential sale of its advanced Blackwell chips to China. Huang noted that the talks are still in their initial stages and are expected to take time.
Analysts suggest that the national security concerns raised around such exports may ultimately serve as a negotiating tool for the administration, giving it leverage to set terms on technology trade. In practice, this could mean Nvidia agreeing to pay the U.S. government for the right to supply its chips, balancing commercial opportunity with political and regulatory considerations.
Earnings Strength vs. Market Caution
NVIDIA’s recent rally to fresh highs has lost momentum as policy uncertainty and a broader risk-off market tone weigh on sentiment. Ahead of the Q2 earnings release, investors braced for the impact of U.S. export restrictions on future growth. While a late-week rebound followed Fed Chair Jerome Powell’s dovish tone at Jackson Hole, the stock has since slipped, currently trading near $175 versus last week’s close of $181.60.
Despite stellar numbers—revenue up 56% year over year and strong profit growth across both GAAP and non-GAAP metrics—volatility remains elevated. NVIDIA’s Q3 outlook points to $54 billion in revenue and mid-70% gross margins, reaffirming its leadership in AI and data centers. Rising costs remain a factor, but profitability is holding strong, keeping the company on track for another record fiscal year.
Technical Outlook – Back Below the 20 SMA Again in Afterhours
From a technical perspective, the 20-day simple moving average (SMA) that previously served as reliable support since May has flipped into resistance. Momentum signals suggest further downside if buyers fail to reclaim this level. A retest of $153—a key price point from prior cycle highs—remains possible should selling pressure persist.
Nvidia Q2 Earnings Report
GAAP Results (Q2 FY26)
- Revenue: $46.74B (↑6% Q/Q, ↑56% Y/Y)
- Gross Margin: 72.4% (↑11.9 pts Q/Q, ↓2.7 pts Y/Y)
- Operating Expenses: $5.41B (↑8% Q/Q, ↑38% Y/Y)
- Operating Income: $28.44B (↑31% Q/Q, ↑53% Y/Y)
- Net Income: $26.42B (↑41% Q/Q, ↑59% Y/Y)
- Diluted EPS: $1.08 (↑42% Q/Q, ↑61% Y/Y)
- Non-GAAP Results (Q2 FY26)
- Revenue: $46.74B (↑6% Q/Q, ↑56% Y/Y)
- Gross Margin: 72.7% (↑11.7 pts Q/Q, ↓3.0 pts Y/Y
- Gross Margin ex-H20 charges: 72.3% (↑1.0 pt Q/Q)
- Operating Expenses: $3.80B (↑6% Q/Q, ↑36% Y/Y)
- Operating Income: $30.17B (↑30% Q/Q, ↑51% Y/Y)
- Net Income: $25.78B (↑30% Q/Q, ↑52% Y/Y)
- Diluted EPS: $1.05 (↑30% Q/Q, ↑54% Y/Y)
- EPS ex-H20 charges/tax: $1.04 (↑8% Q/Q)
Q3 FY26 Outlook
- Revenue: ~$54B ±2%
- Gross Margins: GAAP 73.3%, Non-GAAP 73.5% (±50 bps)
- Operating Expenses: GAAP ~$5.9B; Non-GAAP ~$4.2B
- Other Income/Expense: ~$500M (ex-investment gains/losses)
- Tax Rate: 16.5% ±1%
- Note: Outlook excludes H20 shipments to China.
Highlights
- Revenue up sharply year-over-year, demonstrating sustained AI/data center demand.
- Margins stabilized near the mid-70% range, with management confident in exiting FY26 at those levels.
- Continued operational scaling despite higher operating costs.
- Clear guidance signals confidence in demand strength into Q3.
Conclusion: NVIDIA continues to deliver exceptional earnings growth, but markets are taking a cautious stance as export restrictions, rising costs, and geopolitical risks cloud the near-term picture. While the company’s long-term AI and data center story remains compelling, technical resistance and policy headwinds suggest investors should brace for heightened volatility.
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