NVIDIA to Post Q2 Earnings: Buy, Hold, or Take Profits?

NVIDIA is poised to report strong fiscal Q2 earnings on August 27, projecting revenues of $46.03 billion, up 53.2% year-over-year, and a 47.1% rise in EPS. This anticipated robust performance is primarily fueled by high demand for its new Blackwell Ultra GPUs, the resumption of H20 chip sales to China, and significant increases in data center capital expenditures by tech giants like Alphabet, Meta, Amazon, and Microsoft, underscoring sustained long-term demand for NVIDIA's AI infrastructure. The confluence of these factors suggests a positive outlook and potential stock appreciation.

Analysis

NVIDIA is positioned for a strong fiscal second-quarter earnings report, with revenue projected to reach $46.03 billion, representing a 53.2% year-over-year increase, and earnings per share forecasted to grow 47.1% to $1.00. This outlook is supported by two primary catalysts: the commencement of large-scale shipments for the new, high-demand Blackwell Ultra GPUs and the resumption of H20 chip sales to China. The China sales are expected to contribute approximately $8 billion in revenue for the quarter, helping to recover from a $2.5 billion sales loss in Q1, though this now includes a 15% revenue-sharing stipulation with the U.S. government. Furthermore, the long-term demand trajectory appears robust, evidenced by significant announced increases in 2025 data center capital expenditures from key hyperscale customers including Amazon (to $118 billion), Microsoft ($88 billion), Alphabet (to $85 billion), and Meta (to $66 billion), which directly underpins sustained demand for NVIDIA's AI hardware.

Key Decisions for Investors

• Given the strong secular growth drivers from escalating data center capex and a favorable product cycle with the new Blackwell architecture, long-term holders should consider maintaining their positions through the earnings release.
• Investors should closely monitor the actual revenue contribution from China and management's commentary on the gross margin impact of the 15% revenue-sharing agreement, as this is a new and material variable.
• Potential new investors should note that while the outlook is positive, high expectations are priced in; waiting for confirmation that Q2 results meet or exceed forecasts may be a prudent strategy to mitigate downside risk from any potential guidance disappointment.