Following market close on Wednesday, graphics-chip maker Nvidia (NVDA 1.44%) announced some impressive second-quarter results. Highlighting the tech company's momentum, revenue surged 68% year over year to a record $6.5 billion. Revenue and adjusted earnings per share for the period both beat analysts' consensus forecast. 

Here's a closer look at what's driving this growth, as well as some other key takeaways from the quarter.

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Broad-based momentum

Fueling Nvidia's growth was an 85% year-over-year increase in gaming revenue to $3.06 billion and a 35% jump in data center revenue to $2.37 billion. Notably, total revenue grew sharply sequentially, as well, increasing by 15%.

Capturing the company's broad-based momentum, Nvidia saw record revenue levels across gaming, data center, and professional visualization platforms. In the company's second-quarter earnings release, management credited this strength to "pioneering work in accelerated computing continues to advance graphics, scientific computing and [artificial intelligence]."

Margin expansion

Helping profitability was a wider gross profit margin. The key profitability metric improved both year over year and sequentially.

On a generally accepted accounting principles (GAAP) basis, gross margin increased 600 basis points year over year to 64.8%. Sequentially, it improved 70 basis points. Non-GAAP (adjusted) gross margin increased to 66.7%, which was a 70 basis-point increase year over year and a 50 basis-point increase sequentially.

Improvement in the company's non-GAAP gross margin was driven by higher average selling prices of the company's GeForce GPUs and further sales growth in the company's high-margin Ampere architecture products.

Of course, soaring revenue and margin expansion combined to drive huge growth in non-GAAP earnings per share (EPS). Non-GAAP EPS rose 89% year over year to $1.04.

Tons of cash

Cash, cash equivalents, and marketable securities at the end of the period were a whopping $19.65 billion, up from just $11 billion this time last year and $12.7 billion in the prior quarter. Investors should note, however, that $5 billion of this increase in cash was due to $5 billion of debt issuance. The rest came from free cash flow generation.

Speaking of free cash flow, or the company's cash from operations less capital expenditures, it's pouring in in massive amounts. Q2 free cash flow was $2.48 billion -- up from $1.35 billion in the year-ago quarter and $1.56 billion in the prior quarter.

With cash like this, the company is able to pay investors dividends, even as it invests aggressively in the opportunities in front of it. Nvidia paid $100 million worth of dividends to shareholders during Q2.

A strong Q3 outlook

Looking to Q3, management expects another sequential increase in revenue from the $6.5 billion in revenue it generated in Q2. Nvidia guided for revenue of about $6.8 billion in the period. It expects further margin expansion, too, with Nvidia guiding for an adjusted gross profit margin of 67%.

The quarter provided some substance to the growth-stock's premium valuation, justifying the shares' big gains this year.