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Has Nvidia’s AI Boom Hit a Wall? | What Next for $4 Trillion Giant
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August 28, 2025
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3:27Now PlayingNvidia, the world's most valuable company, gave a tepid revenue forecast for the current period, signaling that growth is decelerating after a staggering two-year boom in artificial intelligence spending. Sales will be roughly $54 billion in the fiscal third quarter, which runs through October, the company said in a statement. Though that was in line with the average Wall Street estimate, some analysts had projected more than $60 billion. Bloomberg Technology host joins Stephen Carroll and Lizzy Burden to discuss.
The outlook adds to concern that the pace of investment in AI systems is unsustainable. Difficulties in China also have clouded Nvidia’s business. Though the Trump administration recently eased curbs on exports of some AI chips to that country, the reprieve hasn’t yet translated into a rebound in revenue.
Nvidia shares fell about 1.6% in premarket trading before New York exchanges opened on Thursday. They had rallied 35% this year through the close, lifting the company’s market capitalization above $4 trillion.
During a conference call with analysts Wednesday, the company’s leadership rejected the notion that interest in deploying AI infrastructure was flagging.
“The opportunity ahead is immense,” Chief Executive Officer Jensen Huang said. “We see $3 trillion to $4 trillion in AI infrastructure spend by the end of the decade.”
The company also approved an additional $60 billion in stock buybacks. Nvidia had $14.7 billion remaining under its previous repurchase plan at the end of the second quarter.
Sales in that period, which ended July 27, rose 56% to $46.7 billion. That compared with an average estimate of $46.2 billion. Though the gain added more than $16 billion in quarterly revenue from a year earlier, it was the smallest percentage increase in more than two years.
Second-quarter profit was $1.05 a share, minus certain items. Wall Street was looking for $1.01.
The data center unit, a division that’s now larger by itself than any other chipmaker, had sales of $41.1 billion. That compares with an average estimate of $41.3 billion. Gaming-related revenue — once Nvidia’s main source of income — was $4.29 billion. Analysts projected $3.8 billion on average. The automotive segment generated $586 million in sales, a bit shy of estimates.
The results showed hints that spending by giant data center operators “could tighten at the margins if near-term returns from AI applications remain difficult to quantify,” Emarketer analyst Jacob Bourne said in a note.
Nvidia is still dealing with the fallout from a growing US-China rivalry, where semiconductor technology has become a major flashpoint. In April, the Trump administration tightened restrictions on exports of data center processors to Chinese customers, effectively shutting Nvidia out of the market. Washington has subsequently rolled that back, saying that the US will allow some shipments in return for a 15% slice of the revenue.
At the same time, Beijing has encouraged a move away from using US technology in AI systems accessed by the Chinese government. The shifting policies have made it difficult for Wall Street to predict how much revenue Nvidia might be able to recover in the market. Some analysts have made projections in the billions of dollars, while others have refused to predict any China sales until the company makes the situation clearer.
Heading into the earnings report, Nvidia analysts had a roughly $15 billion gap between their highest and lowest estimates for third-quarter revenue — one of the largest such ranges in the history of the company.
Nvidia said it didn’t record any sales of its H20 AI chip to China-based customers in the second quarter, a decline of about $4 billion in revenue from the prior period. The third-quarter forecast excluded H20 sales as well.
Nvidia also noted that the US government hasn’t yet codified its plan to take a 15% cut of revenue from China AI chip sales. And it acknowledged risks to enacting the policy.
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"Bloomberg Technology" is our daily news program focused exclusively on technology, innovation and the future of business hosted by Ed Ludlow from San Francisco and Caroline Hyde in New York.
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