Nvidia (NVDA) reported second quarter earnings after the bell on Wednesday that beat on the top and bottom lines, though its data center revenue came in just shy of analyst expectations, weighing on the stock in after-hours trading.
The company reported Q2 data center revenue topped out at $41.1 billion. Analysts were expecting $41.3 billion, according to data from Bloomberg. Segment revenue was $26.2 billion in the prior-year period. The numbers didn't include sales of its lower-powered H20 chips into China.
Nvidia also noted that approximately 50% of its data center revenue came from large cloud service providers.
The company's stock price fell more than 3% on the news in after-hours trading.
Nvidia reported adjusted earnings per share (EPS) of $1.05 on revenue of $46.7 billion. Analysts were anticipating adjusted EPS of $1.01 on revenue of $46.2 billion. The company reported adjusted EPS of $0.68 and revenue of $30 billion in the same quarter last year.
Nvidia projected Q3 revenue of $54 billion plus or minus 2%; expectations were for $53.4 billion. The company said its projections didn't include H20 sales. The company also approved an additional $60 billion in stock buybacks.
Nvidia shares were up 35% year to date and over 40% over the past 12 months as of Wednesday afternoon. In July, the chipmaker became the first company to see its market capitalization top $4 trillion.
Nvidia's EPS and revenue growth have moderated over the past few quarters following the massive growth spikes it saw during the onset of the AI craze. Total revenue growth in its latest quarter came in at the the slowest pace since the first quarter of its fiscal year 2024.
Nvidia CFO Colette Kress noted that data center compute revenue declined 1% sequentially as a result of a $4 billion reduction in H20 sales. Revenue in gaming, Nvidia's second-largest segment, hit $4.3 billion, above estimates.
In a statement, CEO Jensen Huang said production of its next-gen Blackwell chips "is ramping at full speed, and demand is extraordinary."
"The AI race is on," Huang added, "and Blackwell is the platform at its center."
The report comes after a flurry of moves between the company and the Trump administration, which saw Trump revoke his prior ban on the sale of Nvidia's chips to China but will now require the AI giant to pay the government a 15% cut of sales into the country.
Trump initially banned the sale of chips to China in April and dropped the ban in July, adding the 15% fee in August.
Trump also announced he will place a 100% tariff on semiconductor shipments into the US unless companies commit to building in the country. Nvidia should be exempt from the tariff.
Nvidia is also preparing a new chip for the Chinese market based on its Blackwell architecture, but the company would need to get Trump's approval to sell it in the region.
The Chinese government has also come out in recent weeks to warn local companies against using Nvidia's chips, saying they could contain "backdoor" security risks.
Nvidia has denied the charge and is working with the Chinese government to address the matter.
