NVIDIA Corporation (NVDA) Earnings & Analysis

Latest quarter

NVIDIA reported Q2 FY2027 revenue of $96.2 billion, above the consensus of $91.8 billion, with revenue 4.82% above the consensus. The company reported adjusted EPS, as the consensus counts it, of $2.22, above the consensus of $2.09, or 6.22% above the consensus.

The filing shows revenue rose 105.9% from $46.7 billion a year earlier, driven by Data Center products for accelerated computing and AI solutions. NVIDIA reported Data Center revenue of $89.0 billion, up 117% year over year, while Edge Computing revenue was $7.2 billion, up 27% year over year. The filing attributed Data Center growth to the ramp of Blackwell Ultra infrastructure and Edge Computing growth to Blackwell workstation sales, partly offset by slower consumer-PC sales.

NVIDIA reported diluted EPS of $2.46, up 127.8% from $1.08, net income of $59.7 billion, and free cash flow of $21.4 billion. The company reported gross margin of 75.0%, versus 72.4% a year earlier, and operating margin of 66.2%, versus 60.8%. The company said Q2 revenue was above its $91.0 billion, plus or minus 2%, outlook, while GAAP gross margin of 75.0% was within its 74.9%, plus or minus 50 basis points, outlook.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

Revenue came in within or above the company’s guide in 7 of the last 7 quarters it guided.

What management said on the call

Colette Kress said demand was broad across hyperscalers, AI labs, AI-native companies, enterprises and sovereign customers, while NVIDIA’s fiscal 2028 revenue outlook is constrained by supply. She said Data Center revenue rose to $89 billion in Q2, with hyperscale revenue of $49 billion and ACIE revenue of $40 billion, and said ACIE demand reflected neocloud capacity additions and purchases by hyperscalers.

Kress said NVIDIA had begun production shipments of Vera Rubin and expected it to account for about 20% of Data Center revenue in Q3. She said Q3 Data Center growth was expected primarily from ACIE, with hyperscale growth expected to reaccelerate in Q4 and fiscal 2028 as Vera Rubin supply grows. Kress also said NVIDIA expects supply to remain a bottleneck at least through fiscal 2028.

On profitability, Kress said memory price increases had exceeded NVIDIA’s prior expectations and were expected to rise further next year. She said NVIDIA expects gross margins to bottom at 71.0% to 72.0% in Q4 before settling at 72% to 73% in fiscal 2028 as price increases take effect in Q1. The company said current Hopper shipments to China are dilutive to corporate gross margins and said its forward outlook includes no China data-center compute revenue because of geopolitical uncertainty.

Huang said analysts’ questions about the 70% fiscal-2028 outlook reflected supply constraints rather than what NVIDIA described as unconstrained demand. He said NVIDIA had secured supply but needed additional capacity, while its supply chain was working to expand output. Huang also distinguished NVIDIA’s full AI-factory platform from inference-specific chips, saying the company’s systems serve multiple phases of the AI lifecycle.

Kress said NVIDIA had invested nearly $50 billion in Frontier AI Labs and had announced financing-platform partnerships intended to raise over $500 billion of third-party capital. She said NVIDIA’s neocloud arrangements combine hardware sales with revenue sharing above a minimum revenue floor, but the company did not quantify future revenue from those arrangements.

Guidance

NVIDIA now expects Q3 FY2027 revenue of $108.0 billion, plus or minus 2%, following its Q2 FY2027 revenue outlook of $91.0 billion, plus or minus 2%. The company expects Q3 GAAP and non-GAAP gross margin of 74.0%, plus or minus 50 basis points, and GAAP and non-GAAP operating expenses of approximately $9.2 billion and $9.0 billion, respectively. NVIDIA now expects FY2027 operating expenses to grow in the low 50s, versus its prior expectation for growth in the upper forties. Kress said NVIDIA expects Q4 GAAP and non-GAAP gross margin to bottom in the 71.0% to 72.0% range and expects fiscal 2028 revenue to grow approximately 70% year over year.