Nvidia’s Record Revenue and Ethernet Domination Can’t Stem 7% Rout as China Revenue Evaporates
Published on 06/29/2026 at 15:13 | Redaktion boerse-global.de
Investors who only glanced at Nvidia’s quarterly scorecard might wonder what all the fuss is about. Revenue of $81.6 billion, up 85 per cent from a year ago, an $80 billion buyback programme, a 25-fold dividend increase, and a market cap that still hovers near $4.7 trillion. Yet the shares ended last week at €168.80, down more than 7 per cent on the week and roughly 17 per cent below the mid-May all-time high of €202.50. The disconnect is stark — and it is being driven by a single, painful variable: China.
The US Commerce Department’s decision in early June to close the loophole that allowed Nvidia’s chips to reach Chinese AI companies via offshore subsidiaries has all but erased the country from the company’s data-centre revenue line. In the first fiscal quarter of 2027, sales to China in that segment were effectively zero, compared with $4.6 billion in the same period a year earlier. Chief Executive Jensen Huang conceded that Huawei has now captured the market for advanced AI chips inside China — a market Nvidia once dominated.
That China void, combined with broader inflation fears and cautious outlooks from rivals, triggered a $1.2 trillion sector-wide rout on Friday alone. While Nvidia’s own margins remain best-in-class, the stock now trades at a price-to-earnings multiple of about 29.5, and the relative underperformance versus memory stocks such as Micron and SK Hynix — both up more than 250 per cent this year — has become glaring.
Ethernet takeover and a pharma giant’s bet
Operationally, however, Nvidia is expanding its moat well beyond GPUs. In the first quarter of 2026 it captured a 21.5 per cent share of the data-centre Ethernet switch market, a segment that generated $2.1 billion in revenue on its own. The company’s entire networking business has tripled to $15 billion, fuelled by demand for ultra-fast 800G switches. Analysts see the push into broader Ethernet compatibility as a key growth vector that extends Nvidia’s reach far beyond the traditional graphics-processor stronghold.
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Another validation came from the pharmaceutical sector. Roche recently fired up an AI factory powered by more than 3,500 of Nvidia’s Blackwell chips — an investment experts estimate at up to $500 million. The facility, operated by Roche’s Genentech unit, has already cut the time required to design oncology molecules by 25 per cent and is using Nvidia’s Omniverse platform to simulate drug production digitally. Such industrial deployments underscore that demand for Nvidia’s compute infrastructure is broadening beyond hyperscalers.
Production pivot and a key technical test
To feed the insatiable appetite for margin-rich AI server chips, Nvidia has slashed production of gaming graphics cards by as much as 30 per cent. Supply chains remain tight, and the company has prioritised data-centre silicon over consumer hardware.
At the bourse, the technical picture is flashing oversold signals. The relative strength index has dropped to 38.2, and the stock is now testing support near the 200-day moving average at €163.66. If that level holds, the long-term uptrend could reassert itself. Europe provided a vote of confidence in June, with 35 new Nvidia-powered AI supercomputers coming online — a record for the region.
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The analyst community remains overwhelmingly bullish: 76 buy ratings against a single hold, with a consensus price target of $309 — roughly 80 per cent above the current euro-denominated price. The bull case rests on whether US and European hyperscalers can fully offset the China revenue hole. With the next quarterly report due in early August, the market will soon learn whether Nvidia’s record numbers can finally close the gap between operational brilliance and shareholder anxiety.
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