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- 😰 Nvidia Falls 3% After Data Centre Revenues Drop
😰 Nvidia Falls 3% After Data Centre Revenues Drop
Here's a rundown of the important points from Nvidia's earnings and what it means for the AI-driven market at large...
Maxwell Nicholson
August 28, 2025
NVIDIA EARNINGS
😰 Nvidia Falls 3% After Data Centre Revenues Drop
🐝 Nvidia ($NVDA) reported earnings last night, so it’s time for a special edition Weekly Buzz breaking them down!
👀 With Nvidia now 8% of the S&P 500, the stock has become one of the most important drivers of the market-at-large, so it’s worth paying attention.
📉 After earnings, the stock dropped -3% and has recovered to -1% so let’s dive into what’s going, and break down the highlights from Nvidia’s earnings:
🤑 Nvidia’s Revenue Jumps Another 56%
🔍 Looking at the high-level numbers:
💰 Revenue: $46.74B, up 56% from last year, and 1.5% higher than analysts expected
🎯 Forward Revenue Targets: $54B, 1.7% higher than analysts expected
💸 Earnings per Share: $1.05, 4% higher than analysts expected
Overall, a very strong quarter - let’s break down the highlights from the earnings report:
✨ Highlights
🇨🇳 Nvidia is Back in China!
China was a massive pain point last quarter, with Trump banning Nvidia from selling its H20 chips to China in April, costing them $4.5B. But in July, Trump had a change of heart, allowing Nvidia to sell to China again. Now, Nvidia is projecting to sell up to $5B in H20 chips in the upcoming quarter.
Despite the hiccups, Jensen Huang, Nvidia’s CEO, is optimistic about China. Currently, Nvidia is still restricted by the US government from selling its newer Blackwell chip to the market, but Huang is hopeful that this could change soon, saying:
“The opportunity for us to bring Blackwell to the China market is a real possibility.”
💽 Blackwell Chip Sales Rise 17% Quarter over Quarter
Speaking of Blackwell, another big focus for Nvidia has been the transition to its new and improved Blackwell product line, which Nvidia says has been ‘seamless’ with production scaling to 1,000 racks per week.
Nvidia reported that its Blackwell sales have grown +17% from Q1 (compared to only +6% for revenue overall), with Jensen Huang hyping it up big time:
“Blackwell is the Al platform the world has been waiting for, delivering an exceptional generational leap.”
☁️ Increased AI Spending from the Cloud Giants
As we covered in the big tech earnings rundown, the cloud providers (Alphabet, Microsoft, and Amazon) are investing massive sums into AI infrastructure, with Nvidia stating they make up over 50% of all its data centre revenue.
While the amount of AI spending has already soared ($95B this quarter compared to <$30B in 2021), Nvidia finance chief Colette Kress say this is just the beginning, projecting $3-4T in AI infrastructure spending by the end of the decade.
💡 One reason for the massive projected increase is what Nvidia calls the ‘shift to reasoning AI’ and ‘long-thinking systems’ which require much more compute power.
And while this would be good news for Nvidia, it also shows how reliant the market has become on the ‘big AI bet’ and on AI spending continuing.
🤖 Robotics Revenues Grow 69%, Huang Says it’s the ‘Biggest Growth Opportunity Outside of AI”
While still a very small part of Nvidia’s business (only ~1% of total revenue), Jensen Huang has highlighted its robotics division as a big long-term growth area for the company, recently announcing its latest robotics chip module, the Jetson AGX Thor, for $3,499, which has been nicknamed the ‘robot brain’.
This quarter, robotics revenue grew 69%, certainly strong growth, but not enough to move the needle in any meaningful way. Despite this Jensen Huang says robotics is the company’s largest growth opportunity outside of AI, with his VP of Robotics adding:
“We do not build robots, we do not build cars, but we enable the whole industry with our infrastructure computers and the associated software”
🤔 So with all this good news, why is the stock down? Well, before we cover that, a quick word from this week’s sponsor BetaPro by Global X!
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NVIDIA EARNINGS CONT.
🤔 Ok, So Why Is the Stock Down?
📉 One reason for the drop is that while Nvidia’s growth was again impressive, marking the 9th straight quarter of >50% revenue growth… over the past 6 quarters there has been a clear downtrend in Nvidia’s growth rate (see the chart above), leading to fears that growth will continue to slow.
📊 But an even bigger reason for the drop after earnings was one number: Data Centre Revenue, which came in just under analyst estimates.
💰 Making up 88% of total sales, Data Centre Revenue hit $41.1B compared to $41.3B expected.
😰 Of the $41.1B, $7.3B came from the networking parts needed to build more complicated systems. And $33.8B came from “compute” or Nvidia’s GPUs, a -1% decline from last quarter.
🚩 That decline was at first a scary red flag for investors, but according to many analysts, if you look past the headline, the reason for the drop was the $4B in lost sales in China, which will be recovered next quarter.
📉 While the stock dropped 3% in after-hours, it’s since recovered as, according to Gene Munster, a co-founder at Deepwater Asset Management, “investors realize that the miss doesn’t bolster broader fears about the AI trade.”.
👨💼 👩💼 Analyst Reactions
Analysts were mostly positive about the earnings report, with many lifting their price targets on the stock. A few notable quotes:
“All in, the playbook remains the same here for NVDA - a solid beat and raise with multiple levers at play to drive upside, against the backdrop of a multi-year runway of growth for AI infrastructure spending, with NVDA in our view continuing to capture a significant majority of the incremental spend (as it has over the past ~3 years)”
“Demand signals remain rock solid with Hopper and Blackwell sold out across the board. Blackwell Ultra ramp well underway alleviating concerns of supply chain issues going forward. We see a path to $7+ in EPS next year with $8+ in C27 and continue to favor NVDA as our overall Top Pick.”
“Overall the results were good, though with the guide perhaps just a hair light of the latest whispers, and while bears might point to computing revenues falling sequentially in the quarter and an “only” inline(ish) datacenter guide this was really just around continued messy China dynamics. But we believe guidance was still very respectable even as it continues to leave China as upside rather than count on it, and appears to indicate a sharp acceleration in the Blackwell ramp into next quarter suggesting core fundamentals remain robust. And the general outlook and environment overall still seem encouraging.”
💡 My Thoughts
👑 One thing is clear to me: we’re in an AI gold rush, and Nvidia is selling the shovels. If the gold rush (aka AI spending by big tech) continues to ramp as Nvidia hopes, Nvidia will continue to soar. But if Big Tech pulls back spending for whatever reason, it could have massive ripple effects across the market.
📊 This isn’t just a concern for Nvidia/Big Tech shareholders, but anyone who holds the S&P 500, with Big Tech now making up over 30% of the S&P 500 and Nvidia alone making up 8%.
🤷♂️ After two years of AI becoming more mainstream, AI spending ramping up, and AI-driven stocks soaring, the big question is how long the boom can continue?
💰 The answer will depend on how long investors will reward Big Tech for the spending frenzy. While the cloud providers have seen soaring revenue as a result in the AI-rush, an MIT report estimates that downstream, 95% of AI-pilots are failing, and even Sam Altman, CEO of OpenAI, has warned the market could be in a bubble.
🔍 As for me, I’ve been working to diversify my portfolio away from tech (which is still 26% of my portfolio) into other sectors like Healthcare, Utilities, and International Markets. That said, I still hold 34.5% of my portfolio in the ZSP S&P 500 ETF and hold direct positions in Nvidia (4.4% of my portfolio), Meta (4.2% of my portfolio), and Microsoft (3.2% of my portfolio).
😎 In any case, things are certainly getting interesting in the markets, and I’ll be here to make sure you stay up to date!
👋 P.S. For those who are new to the Buzz, my name is Max and I’m the CEO of Blossom, moonlighting as the writer of the Weekly Buzz! As a quick bio, I graduated with an Honours in Economics before working as a Management Consultant at McKinsey, advising some of the top companies in the world on strategy and operations, before starting Blossom. If you enjoy my thoughts, make sure to follow me on Blossom where you can see all my portfolio and trades or follow me on Insta for market news video recaps!
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