0001045810-25-000230
SEC filingRevenue surged 62% YoY to $57B, driven by Data Center compute and networking, while gross margin contracted 1.2 ppt to 73.4%.
Revenue for the third quarter of fiscal year 2026 was $57.0 billion, up 62% year-over-year and 22% sequentially. The growth was led by the Data Center segment, which contributed $51.2 billion, up 66% YoY and 25% QoQ. Gross margin decreased to 73.4% from 74.6% a year ago, reflecting the transition from Hopper HGX systems to Blackwell full-scale data center solutions. Sequentially, gross margin improved 1.0 percentage point as Blackwell ramped with an improved mix and cost structure. Operating income rose 65% to $36.0 billion, with operating margin expanding 80 basis points to 63.1%. Net income grew 65% to $31.9 billion, and diluted EPS increased 67% to $1.30.
Compute & Networking segment revenue was $50.9 billion, up 64% YoY. Data Center compute revenue of $43.0 billion grew 56% YoY, driven by demand for Blackwell computing platforms and agentic AI. Networking revenue of $8.2 billion surged 162% YoY, primarily from NVLink compute fabric for GB200 and GB300 systems, along with XDR InfiniBand and Ethernet for AI solutions. Segment operating income grew 62% to $35.7 billion, yielding a 70.2% margin. Graphics segment revenue was $6.1 billion, up 51% YoY. Gaming revenue increased 30% YoY but declined 1% sequentially as channel inventories normalized. Professional Visualization revenue grew 56% YoY and 26% sequentially, supported by the DGX Spark launch and Blackwell sales. Automotive revenue rose 32% YoY. Segment operating income increased 70% to $2.5 billion, with a 41.8% margin.
Management highlighted several key themes for the near future. The Blackwell Ultra platforms (GB300) began shipping in Q2 FY26 and are now the leading architecture across all customer categories. The company is executing a one-year product cadence for Data Center compute, which may cause supply-demand volatility. Open-source AI models and export controls (e.g., AI Diffusion IFR replacement) pose uncertainties. The $4.5 billion H20 charge in Q1 FY26 reflects the impact of US export restrictions, though limited licensed sales have resumed. U.S. manufacturing expansion is underway to add supply chain resiliency. Macroeconomic factors like tariffs and energy availability could affect customer deployments. Liquidity remains strong with $60.6 billion in cash and marketable securities, and the board authorized an additional $60 billion in share repurchases.
As of October 26, 2025, NVIDIA held $11.5B in cash and cash equivalents and $49.1B in marketable securities, providing substantial liquidity. Total debt stood at $8.5B (short-term $1.0B, long-term $7.5B), with a net increase of $4M during the quarter. Shareholders' equity grew to $118.9B, supported by retained earnings of $107.9B. Inventory totaled $19.8B, up 96% from January 2025, reflecting supply buildup. Deferred revenue was $2.4B, with an additional $2.5B in remaining performance obligations from contracts over one year.
Total purchase commitments reached $84.9B, including $50.3B for manufacturing capacity (mostly through FY2027), $26.0B for multi-year cloud service agreements (with scheduled payments from Q4 FY2026 through FY2031+), $6.5B in investment commitments (notably $5B in Intel pending regulatory approval), and $2.1B in other commitments. Operating lease obligations totaled $2.9B, with an additional $7.5B in future leases expected through 2030.
During the first nine months of FY2026, NVIDIA repurchased 262M shares for $36.7B, with $62.2B remaining under authorization (including $60B approved August 26, 2025). Dividends paid totaled $732M ($0.01 per share quarterly). Net debt change was minimal, with no new issuance or repayment. Capital expenditures (property, equipment, intangibles) were $4.8B, or 3.2% of revenue, plus $790M in accrued but unpaid purchases.
Segment data for Q3 FY2026: Compute & Networking delivered $50.9B in revenue (up 64% YoY) and $35.7B operating income (70.2% margin). Graphics contributed $6.1B revenue (up 51% YoY) and $2.5B operating income (41.8% margin). Unallocated items (stock-based compensation, acquisition costs) totaled $2.3B. Revenue by customer headquarters: United States $39.2B (69%), Taiwan $13.8B (24%), China $3.0B (5%), Other $1.1B (2%). Four direct customers each exceeded 10% of total revenue, including one at 22%, all in Compute & Networking.
Operating cash flow (CFO) of $66.5B was $10.6B below net income of $77.1B, indicating significant working capital investment. Key non-cash adjustments included stock-based compensation ($4.8B), depreciation ($2.0B), and deferred tax benefits ($2.0B), partially offset by gains on equity securities ($3.4B). Working capital consumed $11.6B: accounts receivable surged $10.3B and inventories $9.7B, while payables and accrued liabilities provided $7.5B.
Capex of $4.8B more than doubled from $2.2B, representing 7.2% of CFO, signaling heavy investment in infrastructure. Free cash flow (not explicitly stated) would be CFO minus capex, roughly $61.7B, but the filing does not report it.
Capital returns totaled $37.0B, including share repurchases of $36.3B and dividends of $0.7B, covered 3.8x by CFO. An anomaly: income tax cash payments were $13.3B, up from $11.0B, and the deferred tax benefit reversed $2.0B. Overall, strong cash generation but increasing investment and working capital needs.