0001045810-25-000209
SEC filingNVIDIA revenue surged 56% YoY to $46.7B, driven by Data Center AI demand, while gross margin contracted 2.7 pts to 72.4%.
NVIDIA reported revenue of $46.7B for Q2 FY2026, up 56% year-over-year and 6% sequentially, driven by surging demand for Data Center AI infrastructure. Gross margin decreased 2.7 percentage points to 72.4% as the product mix shifted toward full-scale datacenter systems (Blackwell) versus prior-year Hopper HGX systems. Operating income rose 53% to $28.4B, and net income increased 59% to $26.4B ($1.08 EPS), benefiting from higher revenue and a $180M release of previously reserved H20 inventory. Operating expenses grew 38% to $5.4B, driven by compute infrastructure investments (+68%), compensation increases, and employee growth.
Compute & Networking segment revenue soared 56% YoY to $41.3B, fueled by accelerated computing platforms for LLMs, recommendation engines, and generative AI. Data Center compute revenue rose 50% YoY, though sequentially declined 1% due to a $4.0B reduction in H20 sales. Networking revenue surged 98% YoY and 46% sequentially, led by NVLink for GB200/GB300 systems and XDR InfiniBand. Graphics segment revenue grew 51% YoY to $5.4B, driven by Blackwell architecture sales in gaming, Pro Viz (up 32% YoY), and automotive (up 69% YoY). Segment operating income for Compute & Networking increased 50% to $28.4B, while Graphics op income rose 64% to $2.2B.
Management highlighted continued Blackwell platform ramp, including Blackwell Ultra (GB300) shipments, and a one-year product cadence. However, they noted risks from export controls (H20, AI Diffusion IFR replacement rule) and supply chain challenges. No specific quantitative guidance was provided, but the company expressed confidence in liquidity and plans to expand U.S. manufacturing. The adoption of open-source AI models and customer infrastructure buildout are key demand drivers. Gross margin may remain under pressure from product mix and potential tariffs, though sequential improvement is expected as H20 charges abate.
Net income of $45.2B was well supported by operating cash flow of $42.8B, yielding a CFO/Net Income ratio of 0.95x, indicating high earnings quality despite significant non-cash adjustments. Stock-based compensation added $3.1B, but deferred taxes and gains on securities partially offset. Working capital absorbed $4.7B from accounts receivable and $4.9B from inventories, while payables and accrued liabilities provided $5.3B, resulting in a net working capital outflow of $3.4B. Capital expenditures surged to $3.1B, a 132% increase from $1.3B, reflecting aggressive investment in property, equipment, and intangibles. Free cash flow, though not explicitly stated, would be CFO less capex ($39.7B) – ample to cover $24.3B in capital returns (buybacks plus dividends). Investing activities also included $14.4B in marketable securities purchases and $1.0B in non-marketable equity securities. Financing outflows were dominated by $23.8B in share repurchases and $3.4B in employee stock plan tax payments. Overall, NVIDIA generated robust cash flows, heavily returning capital to shareholders while significantly increasing capex.