NORTH AMERICA – Nvidia, a leading AI chip manufacturer, reported strong earnings for the second quarter of its 2026 fiscal year, exceeding market expectations. However, its shares fell sharply by 5% in after-hours trading, reflecting investor caution over future growth in the AI sector.
The company posted revenue of US$46.7 billion (approximately S$142 billion), beating analysts’ forecasts of US$46 billion (S$140 billion). Nvidia also announced a US$60 billion stock buyback programme, signalling confidence in its long-term business prospects. Despite this, its guidance for the next quarter appears modest, with projected revenue of US$54 billion (S$165 billion), only slightly above the market estimate of US$53.46 billion (S$163 billion). This cautious outlook has sparked concerns that the rapid pace of AI investment may slow.
Nvidia’s data centre segment remains the main growth driver, with quarterly revenue rising 56% year-on-year to US$41.1 billion (S$125 billion). Cloud service providers have started bulk purchasing Nvidia’s latest Blackwell architecture chips, which recorded a 17% increase in sales compared to the previous quarter.
Challenges Ahead
Despite strong results, Nvidia faces headwinds, particularly in the Chinese market. Its H20 chip series has encountered export restrictions, adding uncertainty to future revenue growth. Analysts note that while Nvidia continues to benefit from AI demand, geopolitical and regulatory pressures could impact its market expansion.
The stock buyback is also seen as a strategy to reassure investors of the company’s stability amidst broader market volatility. Nvidia’s cautious third-quarter guidance suggests that AI sector spending may not sustain its previous explosive growth, prompting investors to adjust expectations.
Market Implications
The results underscore the importance of data centre demand and advanced chip architecture in driving semiconductor growth. Nvidia’s Blackwell chips are already being adopted by leading technology firms such as TSMC and Foxconn for high-performance computing applications.
Industry observers note that the performance of Nvidia shares could influence broader AI technology investments. As companies worldwide continue to deploy AI solutions, Nvidia’s technology remains a benchmark for innovation, though regulatory challenges and market maturity may temper investor enthusiasm in the near term.