Nvidia Stock Faces a Choppy Q2, But Tailwinds Build for H2 Acceleration

This article is a continuation of our free newsletter from May 23, Nvidia Stock Faces a Choppy Q2, But Tailwinds Build for H2 Acceleration.

For our Premium Members, we discuss the following:

What AI-Related Suppliers and Competitors are Saying Ahead of Nvidia Earnings, including an important supplier correlation that broke down in November and worsened in April.
The timing of when Big Tech capex will hit peak growth and what this means for Nvidia’s stock
The I/O Fund’s trading plan for Nvidia including never-before published buy targets over a 12 to 18-month time frame.

What AI-Related Suppliers and Competitors are Saying Ahead of Nvidia Earnings:

Unlike software, hardware ramps can take considerable time – in this case, Blackwell will have taken nearly 18 months from its announcement in March of 2024 until it ramps in volume in H2 2025. Given the improving, yet still muted commentary from Nvidia suppliers, the I/O Fund is looking toward Nvidia's August and November earnings calls as being the stronger earnings reports this year.

Here is what you need to know about Q1 and Q2 so far – some of which has been reported on while other notable points are being reported for the first time:

AMD to See $700M Impact in Q2; $1.5B Impact in FY2025

AMD is a solid company to track not only for its unique, underdog ascent in the AI market, but also because the company is similarly impacted with export license restrictions on the MI308 variant from tis MI300 series GPUs. Management stated the export restrictions will lead to a $700 million loss in revenue for AMD in Q2.

Here is a statement by CEO, Lisa Su:

“As a reminder, in April, a new export license requirement was put in place for MI308 shipments to China, the impact of which is included in our guidance. We expect revenue to be approximately $7.4 billion plus or minus $300 million. This includes an estimated $700 million revenue reduction as a result of the new export license requirement. Despite this headwind, the midpoint of our guidance represents 27% year-over-year revenue growth. For the full year 2025, we estimate the revenue impact due to the export license requirement to be approximately $1.5 billion.”

In terms of data center growth, it’s expected that AMD’s data center segment will decline in Q2 due to the loss of MI308 revenue yet will resume growth in Q3 and Q4.

Server Makers: Dell, Super Micro and HPE

When we look at AI server makers, there are signs that supply chain bottlenecks are easing — yet not at the pace originally expected for H1 2025.

Super Micro: the Nvidia Proxy

Super Micro is an obvious place to start when parsing out GPU shipments given the AI server maker led the market during the Hopper generation and grew from $7 billion in annual revenue to an expected $22 billion for the fiscal year ending in June – more than a 3X increase from the Hopper generation. When you look further out to include Ampere GPUs, revenue increased 7X from $3 billion in annual revenue to $22 billion in the current fiscal year ending in June.

Pictured Above: Supermicro’s revenue has correlated to Nvidia’s until only very recently. The disconnect that began in November has worsened in the latest quarter.

Super Micro offered a disappointing report as sales declined 19% QoQ and management lowered guidance for FY2025 revenue from $23.5B to $25B to $26B to $30B. At midpoint, this represents a 13.4% miss compared to previous guidance. Notably, this miss is concentrated in the current quarter as the company’s fiscal year ends in June.

While some are pointing toward a transition from Hopper to Blackwell as the issue, to be clear, it’s more likely the China impact from the H20 restrictions combined with delays for NVL72 volume shipments.

Regarding the NVL72s, Supermicro pointed toward direct liquid cooling as the primary hangup for the delays in the Q&A:

“Michael Ng

Great, thanks Charles, that's very helpful. And just as a follow up, can you talk about whether or not you're seeing differences in demand between HGX versus NVL 72 racks? Any differences there either in customer demand or your ability to fulfill demand on either product? Thank you.

Charles Liang

Yes, we see strong demand for kind of GB200 NVL 72 and B200 liquid cooling. But customer liquid cooling data center basically a little bit dead. So that's why they are waiting there, waiting a little bit more than what we expect. So but however the solution, their data center will be ready very soon and we to see our schedule is getting much more exciting now.”

Regarding the H20 impact, Supermicro’s Asia revenue increased 10 points QoQ, which suggests Supermicro was a beneficiary of an increase in China orders to some degree:

Supermicro 10-Q Filing May 2025Supermicro 10-Q Filing May 2025

When looking back, this percentage of Asia revenue is nearly 2X higher than previous quarters this year:

Percentage of Asia sales were 13.5% in the December quarter and 17.9% in the December 2023 quarter
Percentage of Asia sales was 16.1% in the September quarter and 10.6% in the September 2023 quarter

Source: Supermicro 10-Q Sept and 10-Q Dec10-Q Sept and 10-Q Dec

On an annual basis, Supermicro has not reported Asia revenue higher than 21.9% — proving the 29.4% in the latest quarter is certainly an outlier for this company.

Supermicro 10-K Annual FIlingSupermicro 10-K Annual FIling

Overall, both Supermicro and AMD point toward Nvidia’s Q2 as likely the choppiest quarter the company has faced in some time.

Additional Server Makers:

One data point does not make a trend, therefore, it’s prudent to check if these conclusions are being echoed elsewhere. As you’ll see below, the worst is likely behind us for Blackwell delays yet suppliers are not exactly surging in their AI segments ahead of deliveries in this specific quarter.

Dell:

Dell has not reported since February, which provides another month of visibility into how Q1 may fare yet does not offer much in terms of March or April. The company reported AI orders of $1.7 billion, down (53%) QoQ and shipments of $2.1 billion, down (28%) QoQ with $4.1 billion in backlog as customers work through “technology changes.”

Looking ahead, Dell foresees $15B in AI shipments this year yet the guide for the current quarter missed estimates. Dell’s quarter ends in April and the company guided Q1 revenue in the range of $22.5B to $23.5B, representing YoY growth of 3.4% at the midpoint, missing estimates by 3% yet expects adjusted EPS to grow 25% YoY to $1.65.

Dell is a mixed bag of course as there is significant consumer exposure on the PC side – yet interesting enough, analysts are more bullish on PCs outperforming in the upcoming quarter than AI servers due to a pull forward ahead of tariffs with Raymond James stating: ‘The AI transition between GPU generations has been more disruptive than anticipated, and checks suggest PC purchases have been pulled forward in anticipation of tariffs.”

Overall, we need to hear Dell’s update following Nvidia’s earnings before any conclusions can be drawn. What we do know is that in February, Dell was not too confident about their next quarter’s guide, hence lowering it by 3%.

HPE:

Hewlett-Packard is smaller in terms of AI revenue yet reported similar results as Dell in the March earnings report with AI systems mix falling 6.2% QoQ from 17.7% to 11.5%. According to the CEO, the headwinds are unlikely to clear up in Q2: “We recognized roughly $900 million of [AI systems] revenue, up from about $400 million last year, but down sequentially as expected due to chip availability and customer readiness. We expect these factors will continue to affect our AI systems business.” HPE has a mix of segments in total revenue, yet the company’s guidance missed Q2 estimates by 6.6%.

Looking forward, HPE’s statements match what others are saying, which is that Blackwell is finally ramping – although at lower levels than originally estimated: " In AI, we continue to see strong demand from model builders and service providers. We booked $1.6 billion in new AI system orders in the quarter, bringing our cumulative AI system orders to $8.3 billion. The Blackwell GPU generation of products represented approximately 70% of our new order intake in Q1.”

Vertiv:

Vertiv is not a server maker, rather provides the power supply and thermal management solutions required for data center infrastructure. The company lowered its guidance last quarter, yet raised guidance in the most recent quarter – pointing toward a successful resolution to thermal management issues for Blackwell rack-level systems. Here is what management stated: “The $150 million increase in organic sales is driven by both the first quarter and higher expectations in the second quarter versus what was implied in our prior guidance.”

On the call, an analyst asked if Vertiv “precedes the chip shipments” to which the CEO answered affirmatively by 3-6 months. Therefore, the encouraging inflection seen in Vertiv’s report is unlikely to result in an immediate correlation to Nvidia.

Note on Foxconn:

Foxconn (Hon Hai) is a crucial part of Nvidia's Blackwell supply chain, with it reportedly having the world’s largest GB200 manufacturing facility in Mexico. Foxconn said in Q1 that AI server revenue rose 50% YoY, and projected that Q2’s AI server revenue would double QoQ and YoY. Management explained that the reason Q1 did not double was “mainly due to the GB series entering mass production at the end of 1Q25,” and that most of those products would be delivered in 2Q25. Foxconn added that “HGX demand will continue to expand.”

For Q2, Foxconn said that AI servers were entering high-volume production, and would account for a larger portion of revenue at 50% of server sales, up from 40-42% in 2024. Foxconn also expects AI server revenue to improve each quarter of the year, and it reaffirmed guidance for AI server revenue to grow more than 50% YoY to surpass NT$1 trillion (US$33.0 billion) on high demand.

JP Morgan believes that Foxconn entered its large-scale ramp of GB200 production in late March, targeting 30,000 rack shipments for the full-year, with 10,000 of those being GB200/300 NVL72. This suggests that the ramp is still in the early stages, though accelerating into the summer months based on recent rack shipment estimates in April.

Obligatory Discussion on Capex

Capex and how it relates to AI spending needs no introduction at this point. Investors have never had it so easy as to track demand openly like we can with Big Tech’s disclosures on their quarterly and fiscal year capex guidance. Here is an overview of just how current guidance from Big Tech:

Amazon has forecast capex of more than $100 billion this year, up from $78 billion in 2024. This represents the largest amount being spent by a single tech company and is a higher mix of custom silicon compared to GPUs.
Alphabet has forecast capex of $75 billion this year, up from $52.5 billion in 2024.
Meta has forecast capex of $68 billion this year, up from $39.2 billion in 2024. This represents the largest growth among the Big Tech companies this calendar year at 74%.
Microsoft has forecast capex of $80 billion this fiscal year ending in June, up from $44.5 billion. Given Microsoft has a mid-year fiscal year, this represents the largest growth among tech companies over the past 12 months at 80%.

I want to caution that peak years for AI capex growth are likely behind us. Collectively, Microsoft, Amazon, Meta and Google are projected to spend more than $330B on capex in 2025, up nearly 34% YoY. According to UBS, estimates for capex will rise less than 10% YoY to $364B, with Amazon’s capex nearly flat and Meta seeing the largest increase at 15% YoY.

Wall Street has consistently placed capex estimates too low, meaning it’s likely we see greater than a 10% YoY increase next year, yet the chances growth rates accelerate beyond this year’s 34% growth is not likely (hence the statement we’ve likely hit peak growth).

Microsoft recently offered a glimpse that the voracious appetite to grow AI infrastructure may eventually come back down to earth. Management said capex in fiscal 2026 (beginning in the second half of calendar 2025) will grow at a slower pace than FY2025, with a higher mix of short-lived assets. Additionally, capex declined sequentially for the first time in 2 years, at $21.4 billion versus $22.6 billion in the prior quarter. Q3’s figure was also slightly lower than expected due to variability in timing of data center leases, though capex is expected to increase sequentially in fiscal Q4.

There are many avenues for Nvidia to continue its AI dominance, which we’ve covered for the past 2-3 years on the premium site to prepare our readers for Nvidia's long runway. Flat capex will likely spook the markets (more likely in January 2026 than in July) yet we would be buyers as we are quite clear Nvidia’s AI thesis goes well beyond AI servers and infrastructure.

I/O Fund’s Buy Plan

By Knox Ridley

Since launching the I/O Fund live portfolio in May of 2020, Nvidia is one of only three positions we have owned without interruption. Since 2021, Nvidia has remained in the top three, which was two years ahead of the AI surge.

On a more granular level, we backed up our research with 9 buy alerts that we sent to our Members when NVDA was under $20 from 2021 – 2022. Being early to the A.I. trend has been one of the primary reasons why the I/O Fund was able to outperform our benchmarks and competition in 2023 – 2025.

However, unlike many, we favor an active approach – i.e., taking gains in positions, and reducing risk, regardless of how bullish our long-term thesis may be. Stocks do not move in a straight line, and although we believe that we are in the early innings of A.I., we think investors should expect periods of volatility that punctuate the larger trend higher.

For this reason, we cut ¼ of our Nvidia position in June of 2024 at $129.49, just before Nvidia saw a greater than 35% drawdown into August. We further cut half of our position at $127 and $140 on February 6th and 20th of this year, just before Nvidia dropped more than 40% into the April 7th lows.

While both technical and fundamental concerns were the reasons behind these decisions to take gains, we were able to follow up these sales with buys at much lower prices. In our January 2025 article, titled, “Where I Plan to Buy Nvidia Stock Next,”we outlined our long-term targets in the $90s and $80s. We were able to execute this plan on April 4th at $94 and at $87 on April 7th. These were prices targets that I had been discussing with our premium members in my weekly Thursday webinar for many months.

Now that we have seen 54% bounce off the April lows, we believe Nvidia, and the markets are at a major inflection point.

Technical Analysis

We’ll begin with the bigger trend that started on the October lows in 2022. You can see how vertical the pattern is. This is a standard 5-wave pattern, which can allow for two general interpretations on where Nvidia is likely heading next:

Blue – This is our primary analysis and suggests that the April low was the end of the larger 4th wave decline. This would mean that Nvidia is setting up for a 5th wave push to new highs, which should target $170 – $195 then $240 – $295. This will complete the larger uptrend pattern and likely give way to a multi-month correction.
Red – This scenario has the August 2024 low as the bottom of the 4th wave, and the weak and messy push higher into the February high as the final 5th wave in this uptrend pattern. The next larger drop should be a more direct pattern that ultimately breaks below $97. This will setup the final drop to the $70s – $60 region.

NVDA is setting up for a reversal. Note the RSI indicator below. It is currently at the same level that the February top occurred, as well as the first major drawdown in late 2022. This is a key region where bounces tend to fail. Also, note how volume continues to drop the higher we go. There are less buyers the higher we go, which is not a good sign.

What will be key is how Nvidia retraces. If we see a messy and overlapping drop that resembles a 3-wave drop, it is signaling that the bullish blue count is likely in play. On the other hand, if we see a more aggressive and direct drop that resembles 5-wave drop, it will support the probability that the red count is what is in play.

If we zoom in on the current 2025 trend, we can get a better idea of what these paths might look like. This is also the chart we will use to establish a risk management plan for any new buys.

Nvidia broke out from the down trend line that started at the February 2025 top. This is historically a bullish signal, and one that favors the bullish scenario. Furthermore, the smaller degree count looks incomplete. As long as $129 holds, I expect NVDA to push to the $143 – $149 region before putting in a local top.

As stated before, if the next drop is a 3-wave move that is messy and overlapping, we will target the $116, $110, $103 region for an additional buy. As long as this drop holds over $97, we expect to see a low, followed by a larger push into the $240 – $294 region in the coming months. If we instead see a more direct drop that resembles a 5-wave drop, we will be on high alert. A break below $97 will setup a final drop into the $76 – $60 region. This will setup a tremendous buying opportunity, if it happens.

The I/O Fund is closely monitoring Nvidia for a potential entry point. Join us Thursdays at 4:30 p.m. in our Advanced Market webinars, where we’ll outline our strategy for initiating a position with maximum upside in mind. Learn more here.

Pro Members: Don’t miss our biggest sale of the year — save $275 on an annual Advanced Market Signals plan. Email us to upgrade

Please note: The I/O Fund conducts research and draws conclusions for the company’s portfolio. We then share that information with our readers and offer real-time trade notifications. This is not a guarantee of a stock’s performance and it is not financial advice. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis. Beth Kindig and the I/O Fund own shares in NVDA at the time of writing and may own stocks pictured in the charts.

Recommended Reading: