Nvidia Earnings Preview: China Shipments, Blackwell Ramp, and Margin Recovery in Focus

All eyes turn to Nvidia Corp (NVDA.US) this week as the AI-chip leader reports fiscal Q2 2026 earnings on Aug 27 after market close. With a $4 trillion market capitalization, Nvidia has become the bellwether of the AI trade, and its results could set the tone for both the semiconductor sector and broader equity markets.

Core Financial Expectations

• Revenue (Guidance): $45b (+50% YoY, +2% QoQ)
  Consensus: $46.1b

• Gross Margin (GAAP): 71.8% (↓3.3pp YoY, ↑11.3pp QoQ)

• Gross Margin (Non-GAAP): 72% (↓3.7pp YoY, ↑0.7pp QoQ)

• Net Income (GAAP): $22.6b (+36% YoY, +20% QoQ)

• Net Income (Non-GAAP): $24b (+42% YoY, +21% QoQ)
  Consensus: $24.5b

Investor takeaway: The bar is set high — even a small revenue or margin miss could spark volatility given Nvidia’s premium valuation.

Key Watchpoints for Investors

1. China & the H20 Uncertainty

• Background: Q1 results were marred by a $4.5b charge on H20 chips after the U.S. banned shipments. Nvidia recognized only $4.6b of $7.1b planned sales, leaving $2.5b unshipped.

• Latest: The ban was lifted July 15, with shipments resuming under a 15% revenue levy payable to the U.S. government.

• Implications:

  • Short term: Q2 will still reflect the ban impact; Q3–Q4 will benefit from resumed shipments. Bernstein sees $15–20b incremental revenue from H20 in H2.

  • Key risk: Can Nvidia pass through the 15% levy to customers? Chinese demand strength, amid regulatory scrutiny from the Cyberspace Administration of China, remains uncertain.

  • Production constraint: Sustained demand depends on TSMC’s 5nm/4nm capacity, already running at full tilt.

2. Path Back to 75% Margins

• Trend: Non-GAAP gross margin has fallen from 78.9% (FY24Q1 peak) → 71.3% (FY25Q1), pressured by Blackwell ramp delays and lower-margin H20 products.

• Management guidance: Margins to recover toward 75% in H2.

• Watchpoint: The return of H20 shipments may weigh on this recovery. Investors want clarity on whether Blackwell’s scaling can offset H20’s margin drag.

3. Blackwell Ultra & The Road to Rubin

• Blackwell ramp: Nvidia’s GB200 NVL72 is seen as a key revenue driver, but Q1 showed teething issues. The Ultra rollout is the swing factor for H2 guidance.

• Rubin platform: Investors expect management to outline development timelines for Rubin, which could anchor Nvidia’s multi-year AI dominance.

• Tariffs & TSMC Arizona: Nvidia is shielded in theory via TSMC’s N4 Arizona node, but capacity (~30k wafers/month) is insufficient for global demand. Ramp-up speed is critical.

Market Positioning & Options Signals

• Put/Call Ratio: 0.57 → bullish skew.

• Implied Volatility (IV): 48.0% (vs HV 26.8%) → earnings uncertainty premium.

• IV Rank 22 / Percentile 37: Suggests markets expect a moderate but not extreme move.

• Options pricing: ~6% swing implied in either direction post-results.

Risks & Catalysts

Upside Drivers:

• Stronger-than-expected H20 shipments in Q3–Q4.

• Accelerated Blackwell ramp and hyperscaler CapEx demand.

• Clarity on Rubin platform development.

Downside Risks:

• China demand suppression due to regulatory intervention.

• Margin drag from H20 levy and weaker pricing power.

• Tariff-related supply chain costs.

• Any miss on gross margin recovery could pressure the stock more than a top-line miss.

Bottom Line

Nvidia’s Q2 earnings could be the most consequential print of the season, shaping sentiment across AI, semiconductors, and broader risk assets. With expectations elevated, management’s guidance on China sales normalization, Blackwell production, and the path back to 75% margins will be pivotal in