Executive Summary
NVIDIA reported a record quarter (QQ2 2026) with total revenue of $46.7 billion, up 55.6% year over year and 6.1% quarter over quarter. Data center revenue rose 56% YoY, underscoring a durable AI infrastructure upgrade cycle, while gaming revenue reached a record $4.3 billion, driven by the Blackwell-enabled GeForce RTX lineup and ramping supply. The company’s GAAP gross margin was 72.4% and non-GAAP gross margin 72.7%, aided partly by a $180 million inventory release benefit. Despite a disciplined inventory build (inventory rose from $11B to $15B to support Blackwell/Ultra ramp), NVIDIA returned about $10B to shareholders via buybacks and dividends and boosted buyback authorization to $60B. Management provided a robust Q3 guide of approximately $54B revenue (+/- 2%), with gross margins around 73.3–73.5% and higher, ongoing investment in Blackwell/Rubin ramps, and no H20 China shipments included in the outlook. The long‑term storyline remains compelling: AI infrastructure spend is expected to reach $3–$4 trillion by decade’s end, with NVIDIA uniquely positioned as an end‑to‑end AI infrastructure platform (hardware, software, and ecosystem) across cloud, on‑prem, edge, robotics, and sovereign AI initiatives. Risks cited include geopolitical/licensing uncertainties around H20 shipments to China and the substantial execution demands of Rubin/Rack‑Scale AI deployments, but the company’s balance sheet, cash flow generation, and multi‑year product cadence support a constructive, long‑duration investment thesis for NVDA.”,
Key Performance Indicators
Key Insights
Revenue: $46.743B; YoY +55.60%; QoQ +6.08% | Gross Profit: $33.853B; YoY +49.96%; QoQ +26.94% | Operating Income: $28.44B; YoY +52.56%; QoQ +31.44% | Net Income: $26.422B; YoY +59.18%; QoQ +40.73% | EPS: $1.08; YoY +58.82%; QoQ +40.26%
GAAP Gross Margin: 72.4% | Non-GAAP Gross Margin: 72.7% (incl. $180M H20 inventory release benefit; ex-benefit 72.3%)
Operating Expenses: GAAP up 86% sequentially (non-GAAP base) | Free Cash Flow: $13.47B | Operating Cash Flow: $15.37B | Net Cash Provided by Ope...
Financial Highlights
Revenue: $46.743B; YoY +55.60%; QoQ +6.08% | Gross Profit: $33.853B; YoY +49.96%; QoQ +26.94% | Operating Income: $28.44B; YoY +52.56%; QoQ +31.44% | Net Income: $26.422B; YoY +59.18%; QoQ +40.73% | EPS: $1.08; YoY +58.82%; QoQ +40.26%
GAAP Gross Margin: 72.4% | Non-GAAP Gross Margin: 72.7% (incl. $180M H20 inventory release benefit; ex-benefit 72.3%)
Operating Expenses: GAAP up 86% sequentially (non-GAAP base) | Free Cash Flow: $13.47B | Operating Cash Flow: $15.37B | Net Cash Provided by Operating Activites: $15.37B | Cash, Cash Equivalents & Short-Term Investments: $56.79B; Cash at End of Period: $11.64B | Net Debt: -$1.04B (net cash) | Inventory: $15.0B (end Q2, up from $11.0B) | Capex: $1.90B; Data Center Rack Run Rate: ~1,000 racks/week | Data Center Revenue Growth: +56% YoY; Gaming Revenue: $4.3B, +14% QoQ, +49% YoY | Data Center Geographies: China data center revenue in low single digits; Singapore invoicing >99% of data center compute to US customers; Sovereign AI revenue target >$20B this year.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
46.74B |
55.60% |
6.08% |
| Gross Profit |
33.85B |
49.96% |
26.94% |
| Operating Income |
28.44B |
52.56% |
31.44% |
| Net Income |
26.42B |
59.18% |
40.73% |
| EPS |
1.08 |
58.82% |
40.26% |
Management Commentary
Key management themes from the earnings call:
- Strategy and platform roadmap: Blackwell, NVLink 72, GB300, GB200 NBL72, Rubin in fab, and Spectrum XGS/Ethernet/InfiniBand form the backbone of a scalable AI factory paradigm. Jensen Huang emphasized that AI factories are a ‘full-stack co-design problem’ and highlighted the annual product cadence (Blackwell, GB200/GB300, Rubin) as essential to sustained leadership. Quote: ‘We are on track with an annual product cadence and continuous innovation across compute, networking, systems, and software.’
- AI infrastructure TAM and demand: Colette Kress and Jensen outlined a $3–$4 trillion AI infrastructure opportunity by decade’s end, underpinned by cloud and Sovereign AI investments. Quote: ‘We see $3 to $4 trillion in AI infrastructure spend by the end of the decade.’
- H20/china/geopolitics: The company did not include H20 shipments to China in Q3 outlook; potential $2–$5B if geopolitical issues resolve; licensing dynamics remain a risk. Quote: ‘If geopolitical issues reside, we should ship $2 to $5 billion in H20 revenue in Q3.’
- Operating leverage and margins: Strong gross margins, expanding data center activity, and a robust cash flow profile supported a substantial capital return program (buybacks/dividends). Quote: ‘Blackwell has set the benchmark as it is the new standard for AI inference performance.’
- China/open-source and ecosystem: Huang emphasized NVIDIA’s role across clouds, on-prem, edge, robotics, and its broad ecosystem and software stack (CUDA, TensorRT, Dynamo, OpenAI ecosystem).
- Capacity and supply chain: The ramp of GV300 and Rubin will be key accelerants; the run-rate of ~1,000 racks/week signals capacity expansion.
- Financial discipline: NVIDIA returned $10B to shareholders in the quarter and expanded buyback authorization to $60B, underscoring a capital allocation strategy aligned with growth opportunities.
"We see $3 to $4 trillion in AI infrastructure spend by the end of the decade."
— Colette Kress
"Blackwell has set the benchmark as it is the new standard for AI inference performance."
— Colette Kress
Forward Guidance
Outlook and factors to monitor:
- Near-term revenue trajectory: Q3 guide of $54B +/- 2% implies continued momentum into the second half of 2026, supported by data center expansion, Hopper/Blackwell mix, and ongoing AI workloads in enterprise and cloud.
- Margin trajectory: Management maintains mid- to high‑70s gross margin trajectory toward the year-end, with GAAP 73.3% and non-GAAP 73.5% guidance for Q3 and expectation to exit the year in the mid‑70s. Monitor: any H20 shipments to China could alter the quarterly mix and margins if licensed volumes materialize.
- Rubin and capacity risk: Rubin is in fab with anticipated volume production next year; success hinges on ramp timing, silicon supply, and the ability to scale NVLink/NVSwitch/Spectrum XGS networks to support multi‑gigawatt AI factories.
- Geopolitical and sovereign AI: Sovereign AI revenue target of >$20B this year reflects a diversification of demand beyond hyperscalers; regulatory and export controls could influence China/U.S. commerce.
- Industry trends to watch: Accelerating AI inference workloads, long‑term training growth, diffusion of agentic AI and multimodal models, and the continued migration from GPU-only to full AI infrastructure stacks. Investors should monitor: H20 licensing progress, Rubin ramp progress, data center capex trajectories among CSPs, and the competitive responses of cloud and OEM customers.