Nvidia Stock Ends Lower Despite Upbeat Quarterly Earnings; Here’s Why

NVIDIA stock fell around more than 3% on Wednesday after the company reported its quarterly earnings. While the company's quarterly earning was upbeat, its weak data center revenue concerned the stock market investors.

NVIDIA has reported a revenue of $46.7 billion for the second quarter ending July 27, 2025. This marks a 6% increase from the previous quarter and a significant 56% rise compared to the same period last year. The company's Blackwell Data Center revenue saw a sequential growth of 17%. Notably, there were no H20 sales to customers based in China during this quarter.

In the second quarter, NVIDIA's Data Center revenue reached $41.1 billion, reflecting a 5% increase from Q1 and a 56% rise from the previous year. The company announced that its RTX PRO 6000 Blackwell Server Edition GPU will soon be available in popular enterprise servers. Companies like Disney, Foxconn, and Hyundai Motor Group are among the first adopters.

Financial Performance and Shareholder Returns

The gross margins for GAAP and non-GAAP were recorded at 72.4% and 72.7%, respectively. Excluding a $180 million release of previously reserved H20 inventory, the non-GAAP gross margin would have been slightly lower at 72.3%. Earnings per diluted share stood at $1.08 for GAAP and $1.05 for non-GAAP.

During the first half of fiscal 2026, NVIDIA returned $24.3 billion to shareholders through share repurchases and dividends. By the end of Q2, $14.7 billion remained under its share repurchase authorization. On August 26, an additional $60 billion was approved by the Board for share repurchases without expiration.

Gaming and AI PC Developments

NVIDIA's gaming revenue for Q2 was $4.3 billion, marking a 14% increase from Q1 and a 49% rise from last year. The launch of the Blackwell-powered GeForce RTX 5060 contributed significantly to this growth as it quickly became NVIDIA's fastest-ramping x60-class GPU.

The company also expanded its GeForce NOW service with a new Install-to-Play feature, doubling its game library to over 4,500 titles. Additionally, NVIDIA partnered with OpenAI to optimise open-weight models for RTX GPUs.

Outlook for Fiscal Q3

NVIDIA anticipates third-quarter revenue to be around $54 billion, with a margin of plus or minus 2%. The company does not expect any H20 shipments to China in this forecast. GAAP and non-GAAP gross margins are projected at approximately 73.3% and 73.5%, respectively.

Operating expenses are expected to be about $5.9 billion for GAAP and $4.2 billion for non-GAAP measures in Q3 fiscal 2026. The overall operating expense growth for fiscal year 2026 is anticipated to be in the high-30% range.

Professional Visualization and Automotive Sectors

The professional visualization sector saw revenues of $601 million in Q2, an increase of 18% from Q1 and up by 32% compared to last year. NVIDIA introduced new GPUs like RTX PRO 4000 SFF Edition and RTX PRO 2000 Blackwell during this period.

In automotive technology, NVIDIA reported revenues of $586 million for Q2, showing a modest increase of 3% from Q1 but an impressive growth of 69% compared to last year.

Data Center Innovations

NVIDIA introduced Spectrum-XGS Ethernet aimed at connecting distributed data centers for giga-scale AI applications during this quarter. They also collaborated with European countries like France and Germany on building AI infrastructure using their Blackwell platform.

The company continued its global partnerships to accelerate advanced AI supercomputers' development across various regions including Europe and Japan.

NVIDIA's outlook remains optimistic as they continue expanding their product offerings across various sectors while maintaining strong financial performance indicators such as revenue growth rates exceeding industry averages consistently over time periods analysed here today!