Nvidia (NVDA +0.87%), a technology leader best known for its graphics processing units (GPUs) and AI computing platforms, reported earnings for the second quarter of fiscal 2026 on August 27, 2025. GAAP revenue reached $46.7 billion, exceeding the upper end of its previous guidance range and surpassing most analyst forecasts. Diluted earnings per share (EPS) on a Non-GAAP basis climbed to $1.05, representing a substantial year-over-year increase compared to the second quarter of fiscal 2025. Data Center revenue again dominated results, while gross margins (GAAP and non-GAAP) remained strong but slightly below last year’s extraordinary levels. Overall, the quarter marked another period of rapid expansion, powered by new AI hardware launches, strong demand across multiple segments, and continued capital returns to shareholders.
| Metric | Q2 FY2026(quarter ended July 27, 2025) | Q2 FY2025(quarter ended July 28, 2024) | Y/Y Change |
|---|---|---|---|
| Diluted EPS (Non-GAAP) | $1.05 | $0.68 | 54 % |
| Revenue (Non-GAAP) | $46.7 billion | $30.0 billion | 56 % |
| Data Center Revenue | $41.1 billion | N/A | N/A |
| Free Cash Flow (Non-GAAP) | $13.5 billion | $13.5 billion | 0 % |
| Gross Margin (Non-GAAP) | 72.7 % | 75.7 % | (3.0 pp) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2026 earnings report.
Company overview and recent strategic priorities
Nvidia designs graphics processing units (GPUs), central processing units (CPUs), and full-stack hardware for high-performance computing. Its products serve a range of markets, from video gaming to artificial intelligence (AI), data centers, automotive, and robotics. The company's main differentiator is delivering computing power for tasks that require massive parallelism, such as AI model training and rendering real-time graphics.
In recent years, Nvidia has prioritized leadership in AI and data center solutions, investing heavily in research and development and expanding its product line to include GPU-accelerated computing platforms, networking, and AI-directed software. Key success factors include technological leadership in GPU architecture, software integration, and building partnerships with leading cloud providers, enterprises, and automotive manufacturers. Risks have emerged around export controls, high dependence on the Data Center segment, and growing competition from other chipmakers.
Quarter in review: Highlights and performance drivers
The quarter delivered substantial top-line growth, with revenue climbing 56% year over year and a sequential gain over the previous quarter. This performance outpaced management’s earlier guidance, which had set an upper target of $45.9 billion in GAAP revenue. Management commented, “reported GAAP revenue of $46.7 billion, up 6% from the previous quarter and up 56% from a year ago.” Analyst consensus for GAAP revenue had been in the $45 billion to $46 billion range.
The Data Center segment, focused on AI and accelerated computing, generated $41.1 billion in revenue (GAAP), also up 56% from last year and representing 88% of total company sales. This outsized proportion highlights Nvidia’s centrality in the global build-out of AI infrastructure. The launch and ramp-up of the Blackwell platform, Nvidia’s latest AI accelerator GPU, drove a 17% sequential growth in Blackwell-related Data Center revenue. Jensen Huang, founder and CEO of Nvidia, emphasized that demand for the Blackwell Ultra platform, designed for enterprise and sovereign AI, is “extraordinary,” and volume shipments have begun for hyperscalers and other large customers.
Gaming revenue increased 49% compared to the prior-year period. The GeForce RTX 5060, a consumer GPU based on the Blackwell architecture, was introduced and quickly achieved the fastest ramp of any x60-class card in Nvidia’s history. This was complemented by broader adoption of DLSS 4, Nvidia’s deep learning super sampling software, adding value to the GeForce ecosystem. Professional Visualization revenue reached $601 million, up 32% from last year, benefitting from stronger AI workstation demand and new workstation GPU launches.
The Automotive segment posted revenue growth of 69% year over year, reaching $586 million, and expanded shipments of the AGX Thor system-on-chip for advanced driver assistance and robotics. Although Automotive remains a small contributor to overall results, its growth rate is notable.
Non-GAAP gross margin stood at 72.7%, down by 3.0 percentage points compared to the second quarter of fiscal 2025. This margin incorporated a $180 million inventory release tied to H20 chips originally intended for China, which were later recognized as revenue through sales outside China. Non-GAAP gross margin would have been 72.3% excluding this inventory adjustment. Operating expenses also jumped, climbing 36% year over year on a non-GAAP basis.
Capital returns remained a headline. Nvidia returned $24.3 billion to shareholders during the first half of the fiscal year, and the board authorized a further $60 billion for buybacks, bringing total available repurchase capacity to nearly $75 billion. Liquidity held firm, with $56.8 billion in cash and marketable securities on hand. The quarterly dividend was unchanged at $0.01 per share.
The company faced significant headwinds from ongoing U.S. export controls, which blocked sales of its H20 AI chips to China in the first quarter. No H20 shipments to China occurred in the quarter, and management stated that the outlook assumes this restriction continues. Management recognized $180 million from previously reserved H20 inventory sold outside China, but the exclusion from China’s large AI hardware market remains a challenge for forward revenue potential.
Competitive pressure is intensifying, particularly from Advanced Micro Devices (NASDAQ:AMD) with its MI350X and MI355X GPUs targeting AI workloads. Rising competition in high-performance AI networking, especially from Arista Networks (NYSE:ANET), has been flagged as another risk area for Nvidia's margins and market share in the future.
Looking ahead: Guidance and watch items
Management provided robust forward guidance. Revenue for the third quarter of fiscal 2026 is expected to reach $54.0 billion, plus or minus 2%, implying sequential growth of around 16% from the second to the third quarter. Both GAAP and non-GAAP gross margins are projected to improve slightly, at 73.3% and 73.5% respectively. Operating expenses are expected to increase as product development and staffing for expansion continue.
Crucially, management stated, “The company has not assumed any H20 shipments to China in the outlook.” That means restrictions on China market access are expected to persist. Investors should focus on how Nvidia manages further growth in Data Center, potential pacing from AI capital expenditure at major cloud providers, and product adoption rates for Blackwell and related platforms. Operating expenses will remain under scrutiny due to their rapid rise. The quarterly dividend was held at $0.01 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
