Nvidia Faces $9.8 Billion Risk in Data Center Revenue Amid China Weakness and CapEx Cuts

 

Piper Sandler warns Nvidia could lose up to $9.8 billion in annual data center revenue due to reduced capital expenditures and ongoing Chinese market softness. Explore Nvidia's latest financials, growth drivers, and current fundamentals.

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Nvidia (NASDAQ: NVDA), a dominant force in AI and GPU technologies, has been riding a wave of explosive growth. But according to a recent warning from Piper Sandler, the tech giant could face a potential setback—up to $9.8 billion in annual data center revenue could be at risk in a worst-case scenario. The reason? A combination of reduced capital expenditure by tech companies and continued economic weakness in China.

Recent Financial Performance

Despite this cautionary outlook, Nvidia’s recent numbers remain nothing short of impressive. For fiscal year 2025, the company reported total revenue of $130.5 billion, marking a 114% year-over-year growth. Net income stood at $72.9 billion, up a staggering 145%, while earnings per share rose by 147% to $2.94.

Data Center Dominance

The data center segment, which is central to Nvidia's growth story, brought in $35.6 billion in revenue during Q4 FY24 alone. This was driven by surging demand for AI hardware, particularly Nvidia’s powerful Blackwell GPU architecture, which has become essential for training and deploying large language models and advanced AI systems.

Market Challenges and Risks

However, the clouds on the horizon shouldn’t be ignored. A pullback in global tech spending and the impact of U.S.-China trade tensions could dampen future gains. China, once a significant growth market for Nvidia, has been affected by tightening U.S. export controls and slowing demand.

Current Fundamentals

• P/E Ratio: ~60 (reflecting high growth expectations)
• Market Cap: Over $2.3 trillion (as of May 2025)
• Dividend Yield: Minimal – Nvidia focuses on reinvesting in R&D
• Debt-to-Equity: Low, showing financial stability
• Cash Reserves: Strong liquidity position to weather short-term headwinds

Technical Overview

From a technical perspective, Nvidia remains in a strong uptrend. It recently tested support around $850 and bounced back, eyeing new all-time highs. Momentum indicators like RSI and MACD show bullish continuation, although overbought conditions suggest short-term caution.

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Conclusion:

While Piper Sandler’s warning is a reminder of potential risks, Nvidia's fundamentals remain rock solid. With AI adoption accelerating and new GPU innovations in the pipeline, the company appears well-positioned to navigate economic headwinds and continue its leadership in the tech space.

Disclaimer:

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