NVIDIA Falls on Data Center Misses: Buy the Dip With ETFs?

NVIDIA NVDA posted its second-quarter earnings on Aug. 27, 2025, after market close, delivering results that topped analyst expectations on both profits and revenues. The chipmaker reported adjusted earnings per share (EPS) of $1.05 on $46.7 billion in revenues, topping the Zacks Consensus Estimate of $1.00 on $46.14 billion, respectively.

A year earlier, NVIDIA posted $0.68 EPS and $30 billion in revenues. While growth remains steady, the pace has moderated compared to the monumental surge seen during the early AI boom.

Data Center Performance Disappoints

Revenues from the data center segment, its largest business line (which includes sales of chips used to train and refine artificial-intelligence models), came in at $41.1 billion for the quarter, narrowly missing analyst estimates of $41.2 billion. This came against the $26.2 billion recorded in the year-ago period.

The gaming division, its second-largest segment, outperformed expectations with $4.3 billion in revenues. Despite the earnings beat, NVIDIA’s stock fell as much as 3% in extended trading due to a data center revenue miss.

Earlier this year, NVIDIA projected that U.S. export curbs could reduce sales by as much as $8 billion in the July quarter. The company ultimately reported $46.74 billion in Q2 revenues — ahead of estimates of $46.06 billion — but has halted production of its H20 chips following warnings from Beijing.

Q3 Outlook

For the third quarter, NVIDIA projected revenues of $54 billion, plus or minus 2%, ahead of the Zacks Consensus Estimate of $52.22 billion. The company noted that its outlook does not include any shipment of its H20 chips to China, given the ongoing trade restrictions.

However, Bloomberg views NVIDIA's guidance as lackluster. Although sales are projected to be roughly $54 billion in the fiscal third quarter, in line with the average Wall Street estimate, some analysts expect more than $60 billion, as quoted on Bloomberg. 

NVDA also approved a $60 billion stock buyback program, underscoring confidence in its long-term outlook.

AI Demand Continues to Drive Growth

NVIDIA continues to benefit from soaring demand for its advanced chips, which are critical to training and running generative AI applications. Cloud giants, including Microsoft MSFT and Meta Platforms META, are heavily investing in infrastructure, and a large share of that spending is directed toward NVDA hardware.

Geopolitical Challenges

NVIDIA is caught in the middle of the U.S.--China trade dispute. In April, President Trump imposed a ban on the company’s chip sales to China. That ban was lifted in July, but with a new requirement that NVDA pay the U.S. government a 15% levy on sales into China.

In a deal with the administration, NVIDIA agreed to the revenue-sharing measure to maintain market access. Still, Beijing has advised domestic firms to limit the use of NVIDIA’s products, citing security risks. NVIDIA has denied the claims and is in talks with Chinese regulators to address them.

To mitigate these risks, NVDA is preparing a China-specific Blackwell-based chip, though sales would need U.S. government approval.

Buy NVIDIA With ETFs?

NVIDIA has a Zacks Rank #3 (Hold) with a VGM Score of “B.” The stock comes from a top-ranked Zacks Sector (top 44%) and Zacks Industry (top 10%). Moderation in growth rate is understandable and part of a cyclical process.

Hence, if we ignore that area, the world's most valuable company’s growth momentum appears to be on track. This is especially true given the unprecedented rise of AI innovations and usages these days, and NVIDIA’s crucial exposure to most Big Tech’s AI investments.

Investors expect a 6.2% swing in NVIDIA's stock on Aug. 28, data from Option Research & Technology Services indicate, as quoted on the Wall Street Journal. If you have a moderate risk appetite, you can try the dip in this stock via a basket or exchange-traded fund (ETF) approach. ETFs minimize company-specific concentration risks.

The following are the NVIDIA-heavy ETFs that can be played now.

Strive U.S. Semiconductor ETF SHOC – NVIDIA exposure: 25.2%

VanEck Vectors Semiconductor ETF SMH – NVIDIA exposure: 22.57%

VanEck Fabless Semiconductor ETF SMHX – NVIDIA exposure: 21.13%

YieldMax Target 12 Semiconductor Option Income ETF SOXY – NVIDIA exposure: 20.47%

Columbia Select Technology ETF SEMI – NVIDIA exposure: 19.7%

Single-Stock ETFs

Investors seeking to take on more risk could bet on single-stock ETFs with 200% exposure to NVIDIA. These include T-REX 2X Long NVIDIA Daily Target ETF NVDX and the GraniteShares 2x Long NVDA Daily ETF NVDL.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research