NVIDIA starts "De-Mystifying"

Author | Chai Xuchen

Editors | Zhou Zhiyu, Huang Yu

NVIDIA seems to have a hard time creating miracles again. Investors who have been following "Lao Huang" and enjoying high growth days have sensed a hint of danger this time, and they are no longer buying it.

On August 28th, Eastern Time, after NVIDIA released its second-quarter financial report for the 2025 fiscal year, its stock price briefly rose by 2.2% before turning sharply downward, plummeting by 8% at one point. Market anxiety escalated, leading investors to start selling off tech stocks, chip stocks, and AI concept stocks, causing a broad decline in the U.S. stock market. Before the market opened on August 29th, NVIDIA's stock price was still down more than 3.6%.

Looking at the financial report, NVIDIA's performance data is not bad, with $30 billion in revenue, a year-on-year increase of 122%; net profit increased by 168% to $16.6 billion, both meeting market expectations, but the surprises are no longer there.

This trillion-dollar giant that once surged like a "Great Leap Forward" is gradually losing momentum.

In the past year, with the explosive growth of its data center business, NVIDIA's revenue has multiplied. However, the year-on-year growth rate of this main revenue segment has dropped from over 400% in the previous two quarters to 154% in this quarter, and the quarter-on-quarter growth rate has also slowed for four consecutive quarters; NVIDIA's total revenue growth trend has also resonated at the same frequency, ending the 200% growth in this fiscal quarter.

The slowing trend may continue. For the third quarter, NVIDIA has given revenue guidance of $32.5 billion, with a year-on-year growth rate dropping to about 80%. This also means that its trend of "three-digit" growth for six consecutive quarters has come to an end.

Previously, under the continued bullish expectations of analysts, "Huang Jiaozhu" could always bring bigger surprises.

WestPark Capital analyst Kevin Garrigan commented, "For investors with high expectations, NVIDIA's Q3 revenue outlook being only $2 billion above the market average is not enough."

The market is starting to lose its charm for NVIDIA, and under heavy positions, investor sentiment is rapidly diverging, with the AI bubble theory gaining momentum.

As a leader in the AI industry, NVIDIA's performance can be said to be the barometer of the entire AI industry. If there is strong demand for its AI chips, the "wealth creation frenzy" of AI will continue.

Originally, everyone still hoped that it could greatly exceed expectations and lead the market out of volatility. In the weeks leading up to the Q2 financial report, institutions such as Goldman Sachs and Morgan Stanley were all bullish on NVIDIA and were buying in, with about half of the world's top ten hedge funds heavily invested in NVIDIA.

The latest 13F filings disclosed by the SEC show that as of the end of the second quarter of this year, global asset management giants such as JPMorgan Chase, BlackRock, and Vanguard have all significantly increased their holdings.

With a massive influx of funds, market sentiment has been stretched to the extreme. According to StockWe, a U.S. stock big data website, before the financial report, NVIDIA's implied volatility was at 10%, meaning a large fluctuation of over $300 billion up and down.

But now that the cards are on the table, NVIDIA's board of directors, to appease shareholder sentiment, has approved an additional $50 billion share buyback However, this still does not reassure investors, because at the performance meeting, "Master Huang" failed to answer the most concerning questions in the market: Can NVIDIA maintain its strong technological competitiveness and build a strong "moat"; and can tech giants truly make money from AI and continue this feast.

Before the performance meeting, the industry already knew that the highly anticipated ace in the hole, the Blackwell chip, was facing "difficulties". This may have an impact on major clients including Meta, Google, and Microsoft, as Jensen Huang had boasted at the Q1 earnings call that Blackwell would contribute a significant amount of revenue to the company this year.

That evening, CFO Colette Kress admitted that there were production issues with Blackwell and stated that the company is improving the design to increase production, with shipment timing delayed to the fourth quarter.

Jensen Huang revealed that there is extremely high demand for Blackwell from the outside world, and Q4 will contribute "tens of billions of dollars" in revenue. As for whether these tens of billions are incremental, "Master Huang" did not give a direct answer, leading to a drop in the stock price during the conference call.

However, NVIDIA still received support from many institutions such as Goldman Sachs, Morgan Stanley, Bank of America, Deutsche Bank, etc. They believe that even though the delay of Blackwell may cause short-term fluctuations, NVIDIA's solid fundamentals act as a cornerstone for its stable upward trajectory, and the overall demand trend will not be overly affected.

Fidelity Bank predicts that NVIDIA's data center revenue can rely on the Hopper chips (H100, H200) for a longer period of time: with strong demand for H100 currently and H200 chips starting to ship, they can also introduce a simplified version of Blackwell as a temporary solution.

However, as the backlog of Hopper orders is cleared by the end of the year, if Blackwell cannot contribute more incremental revenue, NVIDIA will face a situation where old rivals like Intel, AMD, etc., are catching up, and the "god-making" story will come to an end.

This is not the most concerning issue for investors yet. After the "Battle of the Models," tech giants are becoming more rational, and the outside world hopes to see from NVIDIA's financial report whether customers can truly make substantial profits from the AI race.

In response, Jensen Huang still insists that investing in computational infrastructure is the project with the best return on investment (ROI) today. NVIDIA has just begun reshaping the global data center, which is a trillion-dollar opportunity.

Renowned investment bank Wade Bush also predicts that the $1 trillion AI spending "wave" is underway, and tech companies are still in the early stages of investing in AI hardware. Analyst Dan Ives said, "For every $1 NVIDIA invests in GPUs, the multiplier for tech stocks will increase by $8-10."

Implicitly, the certainty of AI opportunities still lies at the infrastructure level, and it is uncertain whether the capital expenditures of cloud providers and other major clients can support the high growth of NVIDIA's data center business, truly testing investors' patience. Next, if clients' commercialization efforts are delayed, NVIDIA may also find it difficult to escape the cycle.

In the world of technology, the only constant is change itself. Standing at the peak of the industry and being influenced by trends, Jensen Huang, who has experienced several ups and downs, must wage a defensive battle for AI infrastructure