NVDA Q2 Guidance of $91B Excludes China, Hyperscaler Capex Still Flowing

Nvidia's May 22 earnings result settled a lingering bear case that had haunted the AI trade for weeks. Over the past month, every major hyperscaler---Microsoft, Google, Meta, Amazon---raised guidanceCompany-issued forecasts of future financial performance. on capex and AI infrastructure spending. The market feared this fresh spending might not materialize on Nvidia's books, especially if customers front-loaded orders or shifted allocations elsewhere. Nvidia's own 25x forward P/E seemed stretched on those doubts.

The company then posted $81.6B in Q1 revenue (up 262% YoY), $75.2B in data-center revenue, and GAAP net income of $58.3B. Most significantly, management guided to $91B revenue for Q2 2026 and did not hedge or retreat. This guidanceCompany-issued forecasts of future financial performance. is the proof point: the capex momentumThe empirical fact that winners keep winning over the medium term. from hyperscalers is real, flowing directly into Nvidia's business, and the AI buildout is moving into its next phase at scale.

What traders fixated on was a single detail: Nvidia's Q2 guidanceCompany-issued forecasts of future financial performance. already assumes zero China data-center compute revenue due to export restrictions. The Street was handed a number that ignores an entire region's contribution. This is a form of conservatism that bolsters confidence rather than undermining it. Nvidia is not betting on China normalisation; it is promising delivery with a headwind baked in. Meanwhile, competitive threats---Broadcom's custom silicon work with hyperscalers, AMD's MI450X push, even Arm's licensing upside---remain real but have not dented the core story.

The debate now shifts from whether AI capex is real to whether valuations can compress if growth slows. At 33x forward earnings, Nvidia trades at a modest premium to historical norms for a company growing revenues 80%+ YoY. Some analysts argue it could double and remain undervalued; others warn that execution risk and geopolitical pressure (China, export controls, Middle East tensions lifting energy costs) will eventually matter. For now, the market has repriced the narrative from 'capex is slowing' to 'capex is the story,' and Nvidia sits at the centre of that confidence.