There are still four Wall Street bears left on Nvidia. Here’s what they are saying about results

Nvidia reported Q2 adjusted EPS of $1.05 and revenue of $46.74 billion, both exceeding analyst estimates, yet its shares fell 5% overnight due to data center revenue missing expectations for a second consecutive quarter and marking its slowest growth since mid-2023. Despite this, most analysts remain bullish, noting Q3 guidance excludes potential $2-5 billion in China sales, which could significantly boost top-line performance. However, firms including Seaport, Deutsche Bank, D.A. Davidson, and HSBC maintained cautious or hold ratings, citing ongoing concerns about China market access, supply consistency, and the broader industry's ability to absorb significant AI investments.

Analysis

Nvidia reported a mixed second quarter, beating consensus estimates with adjusted EPS of $1.05 and revenue of $46.74 billion, the latter marking a 56% year-over-year increase. Despite these headline beats, the company's stock fell 5% in overnight trading. The negative market reaction was primarily driven by data center revenue missing expectations for the second consecutive quarter, signaling the slowest growth period since the AI boom began in mid-2023. The forward-looking picture is complicated by geopolitical factors; official Q3 guidance excludes potential sales to China, which could add a significant $2 billion to $5 billion to the top line if approvals are granted. This has created a clear divergence in analyst sentiment. While most remain bullish, a vocal minority, including Seaport Research Partners, Deutsche Bank, D.A. Davidson, and HSBC, have adopted a cautious stance with 'Sell' or 'Hold' ratings. Their concerns center on the stock being fairly valued, near-term supply inconsistencies, and broader industry risks related to digesting massive AI capital expenditures, highlighting that execution and valuation are becoming as critical as the overarching growth narrative.

Key Decisions for Investors

• Investors should weigh the strong Q2 revenue and EPS beat against the significant caution signal of a second consecutive data center revenue miss, which is the primary driver of the stock's negative reaction.
• Monitor developments regarding sales approvals for China, as this represents a potential $2-5 billion near-term revenue upside that is not currently priced into the company's official Q3 guidance.
• Given the divergence between bullish sentiment and the cautious 'Hold' ratings from several banks citing fair valuation, it may be prudent to assess if the current stock price adequately reflects risks from supply inconsistencies and slowing growth.
• Pay close attention to future cloud service provider (CSP) capital expenditure trends and progress on the Blackwell product ramp, as these are key catalysts that cautious analysts, such as HSBC, require to turn more bullish.