AI Frenzy Powers Nvidia’s Growth Amid U.S.-China Trade Tensions
Nvidia has posted another blockbuster quarter, fuelled by soaring demand for its artificial intelligence (AI) chips, even as it grapples with ongoing geopolitical challenges between Washington and Beijing.
The California-based company reported revenue of $46.7 billion for the three months ending July, a 56% jump compared with the same period last year. The growth underscores the insatiable appetite from global tech giants building out AI systems, though shares slipped in after-hours trading after results from its data centre business fell short of Wall Street’s highest expectations.
Chief executive Jensen Huang said demand from companies such as Meta and OpenAI had doubled in the past year, with combined spending from four major tech players rising to $600 billion annually. “The AI race is now on,” Huang told analysts, predicting that advances in artificial intelligence could one day help accelerate global economic growth.
Nvidia’s data centre division, which supplies the advanced chips powering AI models, accounted for the bulk of revenue at $41.1 billion – up 56% year on year. However, the performance was marginally below analyst forecasts, prompting investor caution.
Analysts noted that despite the wobble, Nvidia remains unrivalled in the AI chip market. “It’s really largely unchallenged in this space,” said Colleen McHugh, chief investment officer at Wealthify. Investor Eileen Burbidge described the company’s growth as “unbelievable,” though she warned that heavy inflows of capital into the AI sector might reflect “a bit of a bubble.”
The earnings come just weeks after Nvidia briefly became the world’s first $4 trillion company, cementing its role at the centre of the AI boom. The firm expects revenue for the current quarter to climb further to around $54 billion, surpassing Wall Street’s projections.
Yet the company continues to face risks tied to U.S.-China relations. Washington has restricted the export of certain high-performance chips over national security concerns, forcing Nvidia to design modified versions such as the H20 chip for Chinese customers. While some sales licenses have been issued in recent weeks, Nvidia said no H20 shipments had gone out, and the chip was excluded from its current-quarter outlook. The company is also lobbying for approval to sell its next-generation Blackwell chips in China, the world’s largest market for semiconductors.
Industry observers warn that U.S. restrictions are accelerating efforts in China to build homegrown alternatives. “Export controls are fuelling domestic chipmaking,” said Jacob Bourne, an analyst at Emarketer, noting that Nvidia’s push into robotics may prove critical in maintaining its leadership in the AI economy.
