NVIDIA has once again delivered a blockbuster quarter—setting record earnings in Q2 2025. Yet, despite surpassing Wall Street’s top and bottom-line expectations, the stock slipped in after-hours trading. Why? The answer lies in the disconnect between record results and sky-high investor expectations, particularly around data center performance and AI chip sales to China.

📊 Q2 2025 Earnings Highlights

1. Revenue: $46.74 billion (+56% YoY), beating analyst expectations.
2. EPS (adjusted): $1.05 vs. consensus $1.01.
3. Gross Margin: 72.7% non-GAAP, 72.4% GAAP.
4. Net Income: $26.4 billion (+40.8% QoQ).
5. Q3 Guidance: $54 billion revenue projected, above Wall Street consensus.

This marks yet another quarter of dominance for NVIDIA, powered by AI demand and the Blackwell platform.

🏭 Revenue Breakdown by Segment

📈 Quarter-over-quarter, NVIDIA’s overall revenue rose from $44.1B in Q1 to $46.74B in Q2 (+6%).

💡 The data center segment—NVIDIA’s growth engine—still climbed 5% sequentially but fell short of analyst expectations due to restricted H20 sales to China.

⚡ Why Did the Stock Fall?

Even with record revenue and profits, NVIDIA’s stock fell 2–4% in after-hours trading. The reasons:

1. Data Center Missed Elevated Estimates
2. Data center revenue hit $41.1B (+56% YoY).
3. However, Wall Street had forecast even higher numbers, and the shortfall dented investor enthusiasm.
4. China Restrictions
5. NVIDIA’s H20 AI chips are restricted in China.
6. The absence of these sales limited growth in what was previously one of the fastest-growing AI markets.
7. Slower AI Growth Pace
8. This quarter marked the slowest AI revenue growth in nine quarters.
9. With AI hype at all-time highs, even small decelerations worry investors.

🌍 Key Factors Driving Results

1. Global AI Infrastructure Demand: Hyperscalers continue to expand AI clusters, fueling demand for Blackwell GPUs and networking.
2. Blackwell Momentum: Early adoption of NVIDIA’s Blackwell platform drove sequential growth.
3. Networking Growth: Switches, interconnects, and AI system integration contributed strongly.
4. AI Compute Headwinds: A slight sequential decline emerged, driven by the China sales gap.

🔮 Outlook: What’s Next?

Despite the dip, NVIDIA remains on an extraordinary trajectory:

1. Q3 guidance of $54B revenue suggests confidence in continued hyperscaler build-outs and Blackwell adoption.
2. Automotive and AI PC segments are showing renewed strength, hinting at diversification beyond core data center.
3. Long-term demand for AI training and inference remains massive—though geopolitical restrictions will continue to shape results.

📝 Takeaway

NVIDIA delivered another record quarter with revenue surging 56% YoY and net income topping $26B. Yet, when expectations are sky-high, even a minor miss in data center sales or geopolitical constraints can spark selloffs.

For long-term investors, NVIDIA’s fundamentals remain robust. The short-term dip reflects the challenge of sustaining exponential growth in a market priced for perfection—not weakness in the business itself.

👉 Question for readers: