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NVIDIA Q2 Earnings Beat on Blackwell Ultra & Data Center Strength
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Key Takeaways
NVIDIA's Q2 revenues surged 106% to $96.22 billion, driven by record Data Center performance.
Blackwell Ultra lifted Data Center revenues 117% to $89.02 billion as AI demand broadened.
NVIDIA expects Q3 revenues of $108 billion, with Vera Rubin at about 20% of Data Center revenues.
NVIDIA Corporation (NVDA - Free Report) delivered another strong quarterly performance as AI infrastructure demand lifted second-quarter fiscal 2027 results above expectations. Non-GAAP earnings of $2.22 per share for the second quarter rose 120% year over year and beat the Zacks Consensus Estimate by 6.22%.
Revenues surged 106% year over year to $96.22 billion and surpassed the consensus mark by 4.82%. The robust performance at the Data Center segment mainly drove the overall top-line growth.
NVIDIA has surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 5.82%.
NVIDIA Corporation Price, Consensus and EPS Surprise
NVDA's Data Center Growth Broadens Beyond Hyperscale
Data Center revenues jumped 117% year over year and 18% sequentially to $89.02 billion, with Blackwell Ultra infrastructure driving the record performance. Within the Data Center segment, Hyperscale revenues climbed 102% year over year and 13% sequentially to $48.71 billion, supported by Blackwell Ultra demand.
AI Clouds, Industrial and Enterprise revenues advanced 138% year over year and 25% sequentially to $40.31 billion. Growth reflected demand from AI natives, enterprises and sovereign customers, along with hyperscalers using AI clouds. China Hopper shipments were less than 1% of Data Center revenues. Management expects NeoCloud partners to exit 2026 with 8 gigawatts of installed capacity, up from roughly 3 gigawatts at the end of 2025.
Compute & Networking Leads NVIDIA's Segment Mix
Compute & Networking revenues were $88.3 billion, up 114% year over year and 18% sequentially. The performance reflected the continued scale-up of accelerated computing infrastructure and networking alongside the Blackwell ramp-up. Networking revenues also grew 18% sequentially, while Spectrum-X Ethernet revenues increased 2.6 times year over year.
Graphics revenues rose 46% year over year and 12% sequentially to $7.92 billion. Edge Computing revenues increased 27% year over year and 13% sequentially to $7.20 billion, driven by Blackwell workstation sales, partly offset by softer consumer PC sales amid elevated memory and system prices.
NVDA's Margins Remain Steady as Operating Costs Rise
Non-GAAP gross margin was 75%, up 250 basis points from the year-ago quarter and flat sequentially. The year-over-year improvement reflected a better mix from Blackwell Ultra, while Blackwell architecture remained the vast majority of revenues.
Non-GAAP operating expenses increased 54% year over year and 11% sequentially to $8.23 billion. Higher compute infrastructure and compensation and benefits costs drove the increase. Non-GAAP operating income rose 124% year over year to $63.96 billion.
NVIDIA's Cash Flow Supports Supply Expansion
In the second quarter, the company generated operating cash flow of $24.08 billion and free cash flow of $21.34 billion. In the first half of fiscal 2027, it generated operating and free cash flows of $74.42 billion and $69.9 billion, respectively. NVIDIA returned approximately $25.78 billion to shareholders through repurchases and dividends during the quarter and $45.33 billion during the first half of fiscal 2027.
Inventory increased sequentially to $31.58 billion in the second quarter as the company prepared for the Vera Rubin introduction. Supply and capacity commitments climbed to $279 billion from $119 billion in the prior quarter, primarily reflecting memory procurement needed to support demand over the next several years.
NVDA's Balance Sheet Reflects Bigger AI Commitment
At the end of the second quarter, cash, cash equivalents and marketable debt securities totaled $56.6 billion. Accounts receivable reached $63.1 billion, while days sales outstanding rose to 60 days from 45 days sequentially due to extended payment terms on large, multi-quarter agreements with certain investment-grade customers.
NVIDIA also issued $25 billion of senior unsecured notes for general corporate purposes. Separately, maximum gross exposure from land, power and shell guarantees, including the SB Energy guarantees signed in August 2026, totaled $108.5 billion.
NVIDIA's Q3 Guidance Puts Vera Rubin in Focus
For the third quarter of fiscal 2027, NVIDIA expects revenues of $108 billion, plus or minus 2%. The guidance assumes no Data Center compute revenues from China. Management expects Vera Rubin to represent about 20% of Data Center revenues in the quarter.
Non-GAAP gross margin is projected at 74%, plus or minus 50 basis points, while non-GAAP operating expenses are expected to be about $9 billion. Management also expects fiscal 2028 revenues to grow approximately 70%, with supply remaining a bottleneck through at least the end of that year.
The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 earnings is pegged at $12.73 per share, up by 4.9% over the past 30 days, indicating a year-over-year rise of 35.1%. Applied Materials shares have surged 87.5% year to date (YTD).
The Zacks Consensus Estimate for Lam Research’s fiscal 2027 earnings has moved northward by 17.8% to $9.32 per share over the past 30 days and calls for a year-over-year jump of 60.4%. Lam Research shares have soared 83.8% YTD.
The Zacks Consensus Estimate for Palo Alto Networks’ fiscal 2026 earnings has remained unchanged at $3.78 per share over the past 30 days, implying a year-over-year increase of 13.2%. Palo Alto Networks shares have rallied 94.1% YTD.
View the Zacks #1 Rank List
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NVIDIA Q2 Earnings Beat on Blackwell Ultra & Data Center Strength
Key Takeaways
NVIDIA Corporation (NVDA - Free Report) delivered another strong quarterly performance as AI infrastructure demand lifted second-quarter fiscal 2027 results above expectations. Non-GAAP earnings of $2.22 per share for the second quarter rose 120% year over year and beat the Zacks Consensus Estimate by 6.22%.
Revenues surged 106% year over year to $96.22 billion and surpassed the consensus mark by 4.82%. The robust performance at the Data Center segment mainly drove the overall top-line growth.
NVIDIA has surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 5.82%.
NVIDIA Corporation Price, Consensus and EPS Surprise
NVIDIA Corporation price-consensus-eps-surprise-chart | NVIDIA Corporation Quote
NVDA's Data Center Growth Broadens Beyond Hyperscale
Data Center revenues jumped 117% year over year and 18% sequentially to $89.02 billion, with Blackwell Ultra infrastructure driving the record performance. Within the Data Center segment, Hyperscale revenues climbed 102% year over year and 13% sequentially to $48.71 billion, supported by Blackwell Ultra demand.
AI Clouds, Industrial and Enterprise revenues advanced 138% year over year and 25% sequentially to $40.31 billion. Growth reflected demand from AI natives, enterprises and sovereign customers, along with hyperscalers using AI clouds. China Hopper shipments were less than 1% of Data Center revenues. Management expects NeoCloud partners to exit 2026 with 8 gigawatts of installed capacity, up from roughly 3 gigawatts at the end of 2025.
Compute & Networking Leads NVIDIA's Segment Mix
Compute & Networking revenues were $88.3 billion, up 114% year over year and 18% sequentially. The performance reflected the continued scale-up of accelerated computing infrastructure and networking alongside the Blackwell ramp-up. Networking revenues also grew 18% sequentially, while Spectrum-X Ethernet revenues increased 2.6 times year over year.
Graphics revenues rose 46% year over year and 12% sequentially to $7.92 billion. Edge Computing revenues increased 27% year over year and 13% sequentially to $7.20 billion, driven by Blackwell workstation sales, partly offset by softer consumer PC sales amid elevated memory and system prices.
NVDA's Margins Remain Steady as Operating Costs Rise
Non-GAAP gross margin was 75%, up 250 basis points from the year-ago quarter and flat sequentially. The year-over-year improvement reflected a better mix from Blackwell Ultra, while Blackwell architecture remained the vast majority of revenues.
Non-GAAP operating expenses increased 54% year over year and 11% sequentially to $8.23 billion. Higher compute infrastructure and compensation and benefits costs drove the increase. Non-GAAP operating income rose 124% year over year to $63.96 billion.
NVIDIA's Cash Flow Supports Supply Expansion
In the second quarter, the company generated operating cash flow of $24.08 billion and free cash flow of $21.34 billion. In the first half of fiscal 2027, it generated operating and free cash flows of $74.42 billion and $69.9 billion, respectively. NVIDIA returned approximately $25.78 billion to shareholders through repurchases and dividends during the quarter and $45.33 billion during the first half of fiscal 2027.
Inventory increased sequentially to $31.58 billion in the second quarter as the company prepared for the Vera Rubin introduction. Supply and capacity commitments climbed to $279 billion from $119 billion in the prior quarter, primarily reflecting memory procurement needed to support demand over the next several years.
NVDA's Balance Sheet Reflects Bigger AI Commitment
At the end of the second quarter, cash, cash equivalents and marketable debt securities totaled $56.6 billion. Accounts receivable reached $63.1 billion, while days sales outstanding rose to 60 days from 45 days sequentially due to extended payment terms on large, multi-quarter agreements with certain investment-grade customers.
NVIDIA also issued $25 billion of senior unsecured notes for general corporate purposes. Separately, maximum gross exposure from land, power and shell guarantees, including the SB Energy guarantees signed in August 2026, totaled $108.5 billion.
NVIDIA's Q3 Guidance Puts Vera Rubin in Focus
For the third quarter of fiscal 2027, NVIDIA expects revenues of $108 billion, plus or minus 2%. The guidance assumes no Data Center compute revenues from China. Management expects Vera Rubin to represent about 20% of Data Center revenues in the quarter.
Non-GAAP gross margin is projected at 74%, plus or minus 50 basis points, while non-GAAP operating expenses are expected to be about $9 billion. Management also expects fiscal 2028 revenues to grow approximately 70%, with supply remaining a bottleneck through at least the end of that year.
NVDA’s Zacks Rank & Other Stocks to Consider
NVIDIA currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks worth considering in the broader Zacks Computer and Technology sector are Applied Materials (AMAT - Free Report) , Lam Research (LRCX - Free Report) and Palo Alto Networks (PANW - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 earnings is pegged at $12.73 per share, up by 4.9% over the past 30 days, indicating a year-over-year rise of 35.1%. Applied Materials shares have surged 87.5% year to date (YTD).
The Zacks Consensus Estimate for Lam Research’s fiscal 2027 earnings has moved northward by 17.8% to $9.32 per share over the past 30 days and calls for a year-over-year jump of 60.4%. Lam Research shares have soared 83.8% YTD.
The Zacks Consensus Estimate for Palo Alto Networks’ fiscal 2026 earnings has remained unchanged at $3.78 per share over the past 30 days, implying a year-over-year increase of 13.2%. Palo Alto Networks shares have rallied 94.1% YTD.