Nvidia Stock Drops Despite $46.7B Revenue on China Risks

AI chipmaker Nvidia faces market skepticism as China restrictions threaten future data center growth prospects

Key Takeaways

• Nvidia stock drops 3% after earnings despite reporting $46.7 billion quarterly revenue, as data center guidance missed expectations due to Chinese sales restrictions
• Meituan plunges 10.3% in Hong Kong after net profit collapsed 97% to $51.1 million amid fierce price competition with Alibaba and JD.com in food delivery
• Asian markets mixed on AI uncertainty with Japan’s Nikkei gaining 0.5% while Hong Kong’s Hang Seng drops 0.7% as investors reassess AI infrastructure spending

Introduction

Asian technology stocks navigate mixed signals as artificial intelligence leader Nvidia delivers strong revenue growth but tempers near-term expectations. The chipmaker’s latest earnings highlight both the explosive demand for AI infrastructure and emerging challenges from geopolitical restrictions.

Nvidia reported quarterly revenue of $46.7 billion, representing 56% year-over-year growth, yet shares declined over 3% in after-hours trading. The company’s data center revenue guidance fell short of elevated market expectations, primarily due to ongoing restrictions on Chinese sales that exclude recent recovery from current projections.

Key Developments

Nvidia’s second-quarter results demonstrate the continued strength of AI-driven demand while revealing new market dynamics. Data center revenue rose 17% sequentially, driven by robust adoption of the company’s Blackwell platform and GB300/GB200 chips.

The company maintains exceptionally high gross margins above 72% and returned $24.3 billion to shareholders through buybacks and dividends in the first half of fiscal 2026. Management authorized an additional $60 billion for future share repurchases, signaling confidence in long-term growth prospects.

However, revenue from Chinese markets remains uncertain following recent restrictions. While Nvidia resumed sales in China after July, the company excludes these figures from current quarter guidance, citing ongoing regulatory uncertainty.

Market Impact

Regional indices reflect mixed sentiment toward technology investments. Japan’s Nikkei 225 climbs 0.5% while the TOPIX adds 0.4%, buoyed by Mitsubishi Corp’s gains after Berkshire Hathaway increased its stake above 10%.

Hong Kong markets face broader pressure as the Hang Seng Index drops 0.7% to 25,035.78, marking a third consecutive day of losses. The Hang Seng Tech Index sheds 1% amid concerns over competitive dynamics in key sectors.

Chinese mainland markets outperform with the CSI 300 rising 1% and Shanghai Composite gaining 0.4%. Cambricon Tech soars 7.1% to record highs, benefiting from China’s push for domestically sourced AI chips. Semiconductor Manufacturing International Corp jumps 12% following reports that local producers aim to triple AI chip output next year.

Strategic Insights

The competitive landscape in Asia reveals stark sectoral differences. While semiconductor companies benefit from AI infrastructure investment, consumer-facing platforms struggle with intensifying price competition.

Hyperscaler capital expenditure cycles increasingly drive technology valuations, with Nvidia’s performance serving as a proxy for broader AI infrastructure spending. The company’s growth trajectory remains closely linked to major cloud providers’ investment decisions.

Geopolitical factors reshape market dynamics as companies navigate export restrictions and supply chain diversification. Chinese technology firms accelerate domestic alternatives development, creating new competitive pressures for established players.

Expert Opinions and Data

Market analysts view Nvidia’s results as indicative of maturing AI investment cycles. “Although Nvidia’s management intends to avoid competition, the company has inevitably resorted to price cuts to boost market share, ultimately impacting the industry ecosystem,” notes Dickie Wong, executive director of research at Kingston Securities, referring to broader sector dynamics.

According to CNBC, technology shares remain steady despite mixed earnings signals, suggesting investor focus shifts toward sustainable growth metrics rather than pure revenue expansion.

Goldman Sachs analysts caution that near-term outperformance may prove difficult without new capital expenditure announcements from major customers, despite strong long-term prospects for AI infrastructure investment.

Conclusion

Asian technology markets reflect a transition from initial AI enthusiasm toward more measured evaluation of sustainable growth opportunities. While fundamental demand for AI infrastructure remains robust, investors increasingly scrutinize competitive dynamics and regulatory environments.

Nvidia’s mixed reception demonstrates market maturation as growth rates normalize and geopolitical considerations gain prominence. The divergence between mainland Chinese semiconductor gains and Hong Kong technology losses underscores shifting regional competitive advantages in the evolving AI landscape.