Nvidia Investors Digest Decelerating Growth Forecast | Bloomberg Tech 8/28/2025

Key Concepts

NVIDIA, China, AI, Blackwell, H20, Revenue, Growth, Trump Administration, 15% Commission, Data Center, Hyperscalers, Sovereign AI, Rubin Architecture, Quantum Computing, Robotics, AI Accelerators, Trade Tensions, Export Licenses, Intellectual Property, AI Servers, PC Market, Windows 11 Upgrade Cycle, Software, Snowflake, Microsoft Azure, LLMs, Capex, Recurring Revenue.

NVIDIA's Earnings and China Trade Tensions

• Underwhelming Earnings: NVIDIA's earnings were digested by investors as decelerating growth. The stock was down 9/10 of a percent.
• China Focus: A key focus was on China, where NVIDIA had no H20 sales for the third quarter. Jensen Huang sees a "real possibility" to move Blackwell to the China market.
• China Revenue Uncertainty: There was uncertainty about factoring in Chinese revenue. If everything goes well, NVIDIA might have up to $5 billion worth of Chinese revenue.
• CFO on 15% Commission: The CFO addressed the Trump administration's proposed 15% commission on AI chip sales to China, stating there's "no mechanism" to give 15% of China-related revenue to the government as statutes currently exist. Something will have to be codified first.
• Geopolitical Variables: There are many geopolitical variables in the mix, including what Beijing wants, whether there will be more licenses, and how quickly they will be given.
• Conservative Approach: NVIDIA is taking a conservative, measured approach, acknowledging uncertainty about when and how much revenue will come from China.
• $50 Billion Opportunity: Jensen Huang reiterated the $50 billion opportunity in China.
• Analyst Perspective: One analyst stated that if China is backed out from the whisper number, NVIDIA beat not only the street but the whisper number on guidance.
• Trimming NVIDIA Position: One firm trimmed some NVIDIA holdings at $179 and reallocated to Palantir and Crowdstrike. NVIDIA remains 4% of their portfolio.
• Growth Expectations: Earnings growth expectations are 113% for fiscal year 2025 and 50% for 2026. This could translate to $100 billion in revenue over the next 12 months.
• Sovereign AI: Sovereign AI is starting to pick up, with about 20 billion Euro in expectations.
• AMD and Broadcom Up: AMD and Broadcom were up on the news, while NVIDIA was down slightly.
• Clarity on China: Investors need to understand it's very difficult to get real clarity on China.
• Algorithmic Trading: Algorithmic trading tends to drive volatility.
• Long-Term Opportunity: Some investors see the dip as a long-term opportunity.
• Data Center Growth: Data center growth is at 29%, and China could grow it 50%.
• Cadence of Innovation: The cadence of innovation keeps coming, already supporting the Rubin ship and architecture.
• Beyond AI: The focus is expanding beyond AI to quantum and robotics.
• Early Stages of AI: The AI trait is not even close to over; we are in the early stages.
• IBM and AMD: IBM and AMD are partnering on quantum computing.
• Marginal Erosion: Marginal erosion is coming from Apple and Microsoft developing their own chips.
• DeepSeek News: The DeepSeek news was seen as an opportunity because "more begets more."
• Margins: NVIDIA's margins are at 70%.
• Market Capitalization Wipeout: NVIDIA shares were off by 9/10 of a percent, wiping out $38 billion in market capitalization.
• Regulatory Approval: The company is proceeding carefully on the 15% commission, wanting to see something in writing because the terms could change.
• Long Game: NVIDIA is playing the long game, looking ahead to how Trump can help them in China.
• Modified Blackwell Architecture: Jensen Huang hopes to talk to Trump about getting a modified Blackwell architecture into China.
• Trump's Openness: Trump is signaling his openness to granting permission to sell a scaled-back version of the Blackwell chip to Chinese customers.
• Chinese Rivals: Chinese rivals are gaining on the back of the lack of NVIDIA competition.
• IP Risk: Sending a modified chip to China is like handing over the keys to your R&D lab.
• Safeguards: The question is what kind of safeguards this U.S.-based company will follow based on the laws on the books.
• Legal Implications: NVIDIA could face legal implications if a new barrier to the market in China is codified.
• Lawsuit Risk: They may decide to take on a lawsuit or find themselves answering to legal challenges.
• Future of China Market: The $50 billion opportunity in China may not exist in the future.
• FBI Report: A new FBI report on Saul Typhoon found that 80 countries were impacted, with access to metadata and phone calls.
• TSMC Trade Secrets: Three people are being charged for allegedly stealing TSMC trade secrets.

Other Tech Companies and Market Trends

• Snowflake: Snowflake had its best day since November 2024, with revenue growing 32%. They beat and raised in terms of forward-looking guidance.
• Analyst Approval: Analysts across the street liked Snowflake, which had anxiety about new AI startups eating into its business model.
• Growth and Retention: Snowflake is managing to show growth and retention.
• Q3 Guide: NVIDIA's Q3 guide was very strong because Blackwell and Blackwell Ultra are starting to show.
• China Revenues: If you take the China revenues completely out of the data center, the rest of the world accelerated from about 60-ish percent growth in Q1 to 80% growth in Q3 of this year.
• Sovereign AI in Europe: Europe is stop-start in certain countries, with Denmark going hard on sovereign AI.
• Hyperscalers and AI Startups: The real action is still within hyperscalers and AI startups.
• Performance Per Watt: NVIDIA is increasing the performance per watt, and Rubin will improve that performance.
• Amazon's Training: NVIDIA's scale, system, and software give them a competitive advantage over Amazon's training.
• Quantum and Robotics: NVIDIA is focusing on quantum and robotics.
• Quantum Integration: Quantum will slot into the NVIDIA ecosystem by saying they have CPUs and GPUs, and at some point, they will have quantum and switch between those barriers of compute layers.
• GPT Five: GPT Five pushes towards the best possible model and the best possible computing standard for your general task.
• Scaling Laws: The question is how much more compute NVIDIA can sell and continues to be a question of the scaling laws.
• China's Strategy: China seems to be doing is rational, trying to sell us a chip based on architecture that three and a half years old.
• Alibaba: Alibaba is slated to report on Friday and is likely to highlight their AI strategy.
• Chinese Users: Chinese users are reluctant to spend on premium paid subscription models.
• BYD: BYD fell on concerns about possible decreases of exports after Mexico announced plans to tariff China.
• BYD Sales in Europe: BYD sales in Europe are going well, up three-fold, while Tesla saw sales drop.
• State Support in China: There has been so much state support for the auto industry in China that there may be some overdoing of it.
• Price War: There is a campaign in China on the part of the government to do away with what people refer to as a price war.
• Dell: Investors are looking for signs that Dell will boost its AI server shipments.
• AI Server Revenue: Dell is expected to have $7 billion in AI server revenues.
• Windows 11 Upgrade Cycle: The Windows 11 upgrade cycle is going strong, with only 50% of customers having upgraded.
• U.S. Federal Spending: U.S. federal spending is weaker than anticipated.
• Hardware vs. Software: The hardware versus software story is key, with Dell growing on AI servers.
• Microsoft Azure Growth: Microsoft Azure growth is accelerating to 39%.
• ROI Question: The ROI question is getting answered as companies deploy more AI agents.
• Database Businesses: Database businesses are very sticky.
• LLMs and AI Agents: Everyone is trying to figure out what gets intermediated by LLMs and AI agents.
• Multiple Compression: Multiple compression is always huge in software.
• Recurring Business: NVIDIA's biggest concern is that it's not a recurring business.
• Capex Sustainability: It's hard to sustain 50% capex growth in perpetuity.

Conclusion

NVIDIA's recent earnings report and subsequent market reaction highlight the complexities of its growth trajectory, particularly concerning its exposure to the Chinese market and the potential impact of geopolitical factors. While the company's core business remains strong, uncertainties surrounding regulatory approvals, trade tensions, and competition from domestic Chinese players are weighing on investor sentiment. However, NVIDIA's continued innovation, expansion into new areas like quantum computing and robotics, and the overall growth of the AI ecosystem suggest a positive long-term outlook, provided it can navigate these challenges effectively. The performance of other tech companies like Snowflake and Dell underscores the broader trends of AI adoption and the importance of software and cloud infrastructure in supporting this growth.