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Wherever AI hype has risen, warnings of an AI bubble have followed close behind. The comparison to the dot-com era is not without merit: real value was often buried under layers of overpromising.

In the case of AI, the exaggeration shows up in claims like “AGI next year” or “AI will replace all jobs.” Yet beneath the noise, tangible productivity gains are already evident — from imaging and video to software development pipelines.

Governments, too, are driving the momentum because AI functions as a force multiplier. Properly deployed, AI offers unprecedented leverage over information flows and cultural narratives – the very foundations of political legitimacy. 

Palantir (Nasdaq: PLTR) and Oracle (NYSE: ORCL) are emerging as central players in this state-level adoption. And at the junction of AI hype and bubble concerns sits Nvidia (Nasdaq: NVDA), the dominant AI chipmaker, set to release its Q2 earnings on August 27. What can investors expect?

Nvidia’s Analyst Forecast

According to Zacks Investment Research covering 14 analyst inputs, the expected Nvidia earnings per share (EPS) consensus for Q2 sits at $0.94, which is 44.6% higher than the year-ago quarter’s $0.65.

In the last reported quarter ending April, Nvidia tracked a growth of 69% year-over-year. During this quarter, the company suffered a $4.5 billion charge owing to new export requirements for H20 AI inference GPUs, specifically for the Chinese market.

In Q1, Nvidia expected the upcoming Q2 report to bring $45 billion in revenue, plus or minus 2%. For comparison, Q2 2024 brought in $30 billion revenue, which was up 122% from the year-ago quarter. In other words, despite Nvidia being caught between US-China geopolitics, the growth rate is dwindling but still impressive.

Overall, the aggregated revenue expectation for Q2 across 43 analysts sits at $45.92 billion, with a high estimate of $52.62 billion and a low one at $45 billion, which is Nvidia’s baseline. This would put Nvidia’s average YoY sales growth just under 53%.

Nvidia’s China Problem Explained

All of Nvidia’s chips are manufactured by TSMC in Taiwan and at foundries in the U.S. Taiwan is China’s neighboring island whose status remains disputed. Presently, the island is effectively a U.S. military protectorate, which gives the U.S. leverage over China’s AI development.

From 2023 to 2025, Nvidia’s China revenue share shrunk from 21.45% to 13.11% ($17B).

At the same time, China has ample leverage as the dominant exporter of rare earth elements (REEs) that are so critical in the advanced semiconductor sector for military applications. On top of this dynamic, the USG doesn’t necessarily want to harm Nvidia’s bottom line as the carrier of U.S. leadership in AI.

For this reason, President Trump recently adopted a novel approach. Namely, both Nvidia and AMD agreed to pay fixed 15% of sales to USG in exchange for export licenses to China, which was purportedly negotiated down from 20%. This is related to Nvidia’s H20 chips and AMD’s equivalent MI308 chips.

“While we haven’t shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide.”

Nvidia’s spokesperson to BBC

Logically, it wouldn’t make sense to tie purported national security to curtailment of China’s AI advancement, and then put a price tag on that concern. However, President Trump later clarified that the H20 series is “an old chip that China already has.”

At this point in time, H20 sales in China seem to be irrelevant. According to Qingyuan Lin, Bernstein’s senior semiconductor analyst, the Chinese government apparently issued a “hard mandate” to stop domestic companies from buying H20s. This aligns with our previous reporting, wherein Huawei and SMIC are closing in on Nvidia’s tech.

Therefore, China is now more than ever incentivized to spur domestic AI chip ecosystem, despite the loosened export licensing from the US/Taiwan. Nonetheless, Nvidia has an opening with a new lineup.

In Lieu of Blackwell

Presently, Nvidia’s most advanced AI workload architecture is Blackwell. Last week, President Trump described Blackwell as “super-duper advanced.” At the same time, he hinted that even this platform may be on the negotiation table for export licensing.

“It’s possible I’d make a deal…on somewhat enhanced – in a negative way – Blackwell. In other words, take 30% to 50% off of it.”

According to Deloitte research, the global TAM (total addressable market) for semiconductors should reach $2 trillion by 2040, at a compound annual growth rate (CAGR) of 19%. For Nvidia, China would present a $50 billion opportunity.

This puts Nvidia in a tough but manageable spot. The company has to offer something more enticing than H20 to China, while avoiding the sales of its very best – Blackwell. This is where B30A comes in according to insider sources to Reuters.

Although its specifications are not yet finalized, the new B30A chip would have half the power of Blackwell B300 on a single-die. Potentially, this would allow Nvidia to commit to China sales even under President Trump’s steep revenue reduction between 30% to 50%.

After all, the H20 has been negotiated down from 20%, and Trump is an openly transactional president.

The Bottom Line

President Trump seems open to widening the doors for US domestic semiconductor companies into China. Moreover, the recent EU-US trade deal greatly favors these companies with expanded market access and asymmetrical tariff conditions, further entrenching Europe into the U.S. tech stack.

Nvidia generates the bulk of its revenue from the U.S. and Europe, with only China missing as the market not yet fully tapped. To that end, even if Nvidia misses analyst expectations this quarter, it is likely that revenue will exceed expectations later on.

If such a downward price correction occurs, this would be an opportune moment to gain NVDA stock exposure. Year-to-date, NVDA shares are up 26.82%, presently priced at $175.40 per share. According to WSJ’s forecasting data, the average NVDA price target is still above that price level, at $189.73 per share.

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