Nvidia’s $96 billion quarter

Research report

Sources of revenue in Q2 fiscal 2027, the quarter ended July 26, 2026.

All segment and platform figures are from the company's Q2 FY27 press release and CFO commentary filed with the SEC on August 26, 2026. Earnings-call figures are as stated by management on the same day's call and are not separately audited.

1. The quarter in numbers

Revenue of $96.2 billion was up 18% sequentially and 106% from a year ago, the fourth consecutive quarter of accelerating year-on-year growth. It beat the analyst consensus of $92.1 billion and Nvidia's own guidance midpoint of $91 billion, the fourteenth straight quarter above the company's outlook. First-half fiscal 2027 revenue reached $177.8 billion, already 82% of what the company earned in all of fiscal 2026.

2. Where the revenue comes from

Nvidia reports two segments. Compute & Networking carried $88.3 billion of the quarter, or 92% of the total, and grew 114% year on year. Graphics contributed $7.9 billion and grew 46%.

The more useful cut is by market platform, which the CFO commentary splits into Data Center and Edge Computing, with Data Center further divided into two customer groups: Hyperscale, and AI Clouds, Industrial & Enterprise (ACIE). During the quarter Nvidia reclassified one company from ACIE to Hyperscale after a change in its business model, and recast prior periods to match.

Hyperscale, $48.7 billion. The largest cloud operators more than doubled their spend from a year ago and grew it 13% sequentially on the strength of Blackwell Ultra. Hyperscale is now 55% of Data Center revenue, down from about 57% last quarter as the other group grows faster.

ACIE, $40.3 billion. AI clouds (the NeoClouds), industrial and enterprise customers grew 138% year on year and 25% sequentially, driven by AI natives, enterprises and sovereign customers, plus hyperscalers renting capacity from AI clouds. Within it, sovereign AI revenue grew 35% sequentially and more than tripled from a year ago. On the call, Huang put ACIE at roughly half the business and growing at an annual rate of 100%.

Edge Computing, $7.2 billion. Up 27% from a year ago on strong Blackwell workstation sales, partly offset by slower consumer PC sales as elevated memory prices pushed up system costs.

Two smaller threads matter for the mix. Networking revenue set a record, up 18% sequentially, with Spectrum-X Ethernet revenue growing 2.6 times year on year; trailing-twelve-month Grace CPU revenue passed $5 billion. And China has effectively left the picture: Hopper shipments to China were under 1% of Data Center revenue, and the forward outlook assumes no China data center compute at all.

Customer concentration is easing in one direction only. The non-hyperscale half of the data center business is growing twice as fast as the hyperscale half, and sovereign AI tripled in a year.

3. The growth curve

Six quarters ago Nvidia reported $44.1 billion. The quarter just closed was $96.2 billion, and guidance puts the current quarter at $108 billion. Growth has not just continued at scale, it has accelerated for four quarters running.

44.1Q1 FY26

46.7Q2 FY26

57.0Q3 FY26

68.1Q4 FY26

81.6Q1 FY27

96.2Q2 FY27

108.0Q3 FY27

4. Margins and cash

Gross margin held at 75.0% on both GAAP and non-GAAP bases, up 2.6 points from a year ago on richer Blackwell Ultra mix. Operating expenses of $8.4 billion grew 55% year on year, far slower than revenue, so GAAP operating income more than doubled to $63.7 billion. Net income of $59.7 billion included $7.8 billion of gains on equity securities.

Free cash flow was $21.3 billion, and Nvidia returned a record $26 billion to shareholders in the quarter, about $20 billion in buybacks and $6 billion in dividends. The balance sheet is being put to work ahead of the Vera Rubin ramp: inventory rose to $31.6 billion, supply commitments jumped from $119 billion to $279 billion (mostly memory procurement), and days sales outstanding stretched to 60 on extended payment terms for large multi-quarter deals.

5. Outlook and sources

Guidance for Q3 fiscal 2027 is $108 billion, plus or minus 2%, with no China data center compute assumed. Vera Rubin, now in full production, is expected to be Nvidia's fastest ramp yet and to account for about 20% of data center revenue in Q3. On the call, CFO Colette Kress said the company expects revenue to grow approximately 70% in fiscal 2028, and called that a supply-constrained outlook.

The margin path is the trade-off. Q3 gross margin is guided to 74.0%, Q4 is expected to bottom in the 71% to 72% range as memory costs bite, and fiscal 2028 is expected to settle at 72% to 73%. Memory pricing was the one pressure management flagged repeatedly, describing "extreme pricing conditions" that have run past its earlier expectations.

5.1 Sources

1. NVIDIA, press release, Q2 FY2027 resultssec.gov, Aug 26, 2026
2. NVIDIA, CFO commentary on Q2 FY2027 resultssec.gov, Aug 26, 2026
3. NVIDIA, Q2 FY27 earnings call highlightsfinance.yahoo.com, Aug 27, 2026
4. NVIDIA Corp (NVDA) Q2 2027 earnings call highlightsfinance.yahoo.com, Aug 27, 2026
5. NVIDIA, Q4 and fiscal 2026 results (trend data)nvidianews.nvidia.com, Feb 25, 2026
6. NVIDIA earnings Q2 FY27 vs consensusrexshares.com, Aug 26, 2026

All segment and platform figures are from the company's Q2 FY27 press release and CFO commentary filed with the SEC on August 26, 2026. Earnings-call figures (sovereign AI, networking, Grace CPU, fiscal 2028 guidance) are as stated by management on the same day's call and are not separately audited.