Nvidia’s growth outlook and the road to a $5 trillion valuation

Nvidia is unlikely to hold the title of Wall Street’s first $5 trillion giant, according to some analysts. The company’s valuation has already cleared $4 trillion, and while quarterly results continue to beat forecasts, the market reaction shows investors are questioning how much upside is left. Some analysts still see Nvidia hitting $5 trillion by 2026, but the road ahead looks increasingly dependent on whether AI demand can sustain its current pace.

Key takeaways

• Q2 revenue of $46.7B vs $46.2B expected, EPS $1.05 vs $1.01 expected.
  
• Net income surged 59% YoY to $26.4B.
  
• Data centre revenue of $41.1B came in slightly below estimates, falling 1% sequentially as H20 sales dropped out.
  
• Guidance for Q3 of $54B ±2% does not include any H20 shipments to China.
  
• Nvidia approved a $60B share repurchase programme, with $9.7B already spent in Q2.
  

Nvidia China chips question: Is China the growth wildcard?

Nvidia’s blockbuster quarter was delivered without any contribution from China, as the company booked no sales of its H20 processors into the market. These chips, specifically designed to comply with U.S. export restrictions, have become central to Nvidia’s growth debate. 

Analysts estimate that if approvals are granted, shipments could add between $2 billion and $5 billion in revenue per quarter, representing a meaningful 4–10% lift to total revenue. The geopolitical backdrop makes this opportunity highly uncertain. 

The Trump administration initially banned Nvidia’s chip sales to China in April, reversed the decision in July, and then introduced a 15% levy on sales in August. Trump has also threatened a 100% tariff on semiconductors not built in the U.S., though Nvidia is likely to be exempt. 

On the other side, Beijing has warned domestic companies against using Nvidia’s chips, citing alleged security risks. Nvidia has denied the claims and said it is working with Chinese authorities to address them.

The H20 itself has already created significant financial strain. Nvidia incurred $4.5 billion in writedowns related to the chip and previously said it could have added as much as $8 billion to Q2 revenue if sales had been allowed. 

According to CFO Colette Kress, the company could ship between $2 and $5 billion in H20 revenue during the current quarter if the geopolitical environment permits. In short, China is both Nvidia’s greatest untapped growth driver and its most unpredictable risk.

Nvidia data centre revenue and Blackwell ramp

Nvidia’s data centre revenue rose 56% year on year to $41.1 billion, though it missed consensus estimates by $200 million. 

The sequential decline reflected the loss of H20 sales, but the division remains Nvidia’s largest and most important. Revenue was $33.8 billion, down 1% quarter on quarter, while networking sales nearly doubled from a year ago to $7.3 billion.

The real story is the ramp of Nvidia’s Blackwell platform. CEO Jensen Huang confirmed that production is “ramping at full speed” and demand is “extraordinary.” Blackwell chips already account for roughly 70% of data centre revenue, with sales up 17% sequentially. 

With hyperscalers such as Amazon, Microsoft, Alphabet, and Meta making up half of Nvidia’s data centre business, Blackwell’s adoption underlines Nvidia’s central role in the AI infrastructure buildout.

Nvidia’s gaming and robotics segments are strengthening

Outside the data centre, Nvidia’s gaming revenue reached $4.3 billion, up 49% year on year and above expectations. The company also highlighted GPUs tuned to run OpenAI models on PCs, broadening its reach into consumer AI. 

Robotics revenue was $586 million, a 69% increase, though the segment remains relatively small. Meanwhile, Nvidia’s board authorised a new $60 billion share buyback programme, signalling confidence in its long-term growth trajectory.

Nvidia’s valuation pressures

Despite record earnings and raised guidance, the stock’s reaction highlights the challenges of a $4 trillion-plus valuation. Since the generative AI boom began in 2023, Nvidia has posted nine consecutive quarters of more than 50% revenue growth. 

Yet this quarter marked its slowest growth since early fiscal 2024. With expectations sky-high, even a minor miss in data centre revenue was enough to spark a pullback.

The dynamic is clear: Nvidia is delivering near-flawless execution, but investors are demanding fresh catalysts to justify its market capitalisation. The $5 trillion milestone looks within reach, but only if growth accelerates beyond what is already priced in.

Nvidia technical analysis

At the time of writing, the stock price is almost touching a resistance level, hinting at a potential drawdown. Volume bars showing dominant sell pressure with little pushback from buyers - adds to the bearish narrative. Should the drawdown materialise, prices could tumble towards the $172.75 support level. If we see a surprising crash, prices could be held further down at the $142.00 support level. Resistance holds at the $182.54 price level.

Price action scenarios

• Bull case: China approvals allow H20 sales, which will add $2–5B per quarter and push Nvidia closer to $5T.
  
• Bear case: Valuation concerns and slowing growth keep the stock under pressure.
  
• Neutral case: Shares consolidate as investors await clarity on China and regulatory policy.
  

Investment implications

Nvidia remains the most important player in global AI infrastructure, with Blackwell chips and hyperscale demand supporting growth. But at $4.3 trillion, its valuation leaves little margin for error. China represents both the most significant upside and the most volatile risk factor.

For traders, the setup points to volatility. Buybacks and product leadership provide a cushion, but without progress on China, price action could remain capped. Long-term investors must decide whether Nvidia’s unmatched role in AI is enough to justify the premium, or whether the stock is already priced too far ahead of reality.

Frequently asked questions

Why did the stock fall despite strong results?

Nvidia shares slipped after its Q2 data centre revenue came in below expectations, raising fresh questions about the pace of AI demand.

What role does China play in Nvidia’s future?

China could add $2-5B in quarterly sales, but regulatory approvals and political risks mean the timeline is highly uncertain.

How important is Blackwell?

Blackwell already represents 70% of data centre revenue and is ramping fast, reinforcing Nvidia’s leadership outside of China.

‍