AI stocks stumbled after Nvidia's (NVDA) latest Q2 earnings report, which fell short of lofty investor expectations. The chipmaker's results dampened excitement around the broader AI trade, sending several AI-related names lower in after-hours trading.

For Q2 FY26, Nvidia reported record revenues of $46.7 billion, surpassing analysts' estimates of $46.05 billion. Adjusted earnings per share came in at $1.04, above the expected $1.01. However, Nvidia's Data Center revenue came in at $41.1 billion, just under the $41.2 billion analysts had expected.

In addition, the company offered a tepid revenue forecast for the current quarter, signaling that growth may be slowing after a two-year AI boom. The company expects sales of roughly $54 billion in Q3, which aligns with the average Wall Street estimate but falls short of some analysts' projections of more than $60 billion.

The outlook raises concerns that AI investment may be growing too fast to be sustainable.

Challenges in China have also weighed on Nvidia's business. Although the Trump administration recently eased some export restrictions on AI chips to China, this has not yet resulted in higher revenue.

Interestingly, Nvidia CFO Colette Kress said the company hasn't included H20 revenue in its Q3 forecast because of ongoing geopolitical challenges. Kress added that if these issues ease, the company could generate $2-5 billion from H20 chips in Q3, and even more if they receive additional orders.

Notably, CEO Jensen Huang highlighted China as a potential $50 billion market opportunity for the company this year.

According to TipRanks, NVDA stock has a Strong Buy consensus rating based on 35 Buys, three Holds, and one Sell assigned in the last three months. At $199.66, the Nvidia average share price target implies a 10% upside potential.