Nvidia shares drop on China concerns despite strong earnings
Nvidia shares fell more than 5% in after-hours trading Thursday after the chipmaker highlighted ongoing challenges in China, despite reporting another quarter of blockbuster growth.
The stock ended the regular session flat at US$181.60, then slid to US$172.45 following earnings. For the quarter ended July 27, revenue surged 56% to US$46.7 billion, but sales from China, including Hong Kong, dropped 24% to US$2.8 billion.
Nvidia disclosed it sold no H20 chips — processors designed to comply with US export restrictions — during the period. The product had generated US$4.6 billion in the prior quarter.
The pause came as Washington pressed for a 15% revenue cut without formal regulation, while Beijing questioned whether the chips contained “built-in vulnerabilities.” Nvidia denied its GPUs have back doors.
CEO Jensen Huang stressed China remains a priority, estimating it could be a US$50 billion market this year and praising the country’s open-source AI models, including DeepSeek, Alibaba’s Qwen, and Moonshot AI’s Kimi.
Still, US-China tensions loom large. Analysts at Saxo warned that export restrictions could benefit domestic rivals, especially as China’s Semiconductor Index hit a record high this week. Local firms such as Cambricon Technologies, which posted a 4,348% jump in first-half revenue, and foundry SMIC are gaining momentum.
China is also stepping up chip production, with new state guidelines to boost AI capacity and reported plans to triple AI processor output next year.
Despite the headwinds, Wall Street remains upbeat. Wedbush Securities called the pullback a “buying opportunity,” projecting Nvidia’s market value — currently US$4.4 trillion, the highest globally — could reach US$5 trillion by 2026.