Nvidia Earnings: Record Quarter, China Caveat
Nvidia earnings showed record Q2 revenue and a raised Q3 outlook that assumes no China Data Center compute revenue, likely to reweight trader positioning.
KEY TAKEAWAYS
- Nvidia posted record Q2 revenue of $96.2 billion, driven by $89.0 billion in Data Center sales.
- Q3 revenue guidance of $108 billion assumes no Data Center compute revenue from China.
- Operating expenses and margin guidance flagged higher costs, with Q3 GAAP opex near $9.2 billion.
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Nvidia reported record second-quarter fiscal 2027 results for the quarter ended July 26, 2026. The company also raised third-quarter revenue guidance on August 26, 2026, while assuming no data-center compute revenue from China and signaling rising operating expenses.
Record Quarter and AI Revenue Concentration
Nvidia posted revenue of $96.2 billion for Q2 FY27, up 18.0% sequentially and 106.0% year over year. Data Center revenue reached $89.0 billion, rising 18.0% sequentially and 117.0% year over year, driven by strong demand for AI infrastructure. Edge Computing revenue was $7.2 billion, up 13.0% sequentially and 27.0% year over year. Both GAAP and non-GAAP gross margins stood at 75.0%. Non-GAAP diluted earnings per share (EPS) was $2.22, exceeding consensus estimates near $2.08–$2.10.
On a GAAP basis, operating income was $63.7 billion, up 19.0% sequentially and 124.0% year over year. Net income rose 2.0% sequentially and 126.0% year over year to $59.7 billion, producing GAAP diluted EPS of $2.46. Non-GAAP net income increased 118.0% year over year to $54.0 billion. The results materially exceeded Nvidia’s May guidance range of $89.2 billion to $92.8 billion in revenue.
Guidance Excludes China and Highlights Rising Costs
Nvidia set third-quarter fiscal 2027 revenue guidance at $108.0 billion, plus or minus 2%, above analyst consensus near $104.2 billion. The company expects GAAP and non-GAAP gross margins of 74.0%, plus or minus 50 basis points. It projects GAAP operating expenses of about $9.2 billion and non-GAAP operating expenses near $9.0 billion for the quarter. Full-year fiscal 2027 tax rates are forecast between 16.0% and 18.0%.
This guidance explicitly assumes no Data Center compute revenue from China, reflecting U.S. export controls on advanced AI chips amid a large-scale global AI infrastructure buildout. Nvidia also signaled a rising expense trajectory that will affect near-term profit leverage. The company tied near-term upside to continued hyperscale data-center demand and developments around export controls, making operating expenses and China exposure key investor concerns.
Capital Returns and Shareholder Payouts
During the quarter, Nvidia returned approximately $26.0 billion to shareholders through share repurchases and cash dividends. At quarter-end, about $99.0 billion remained under its share repurchase authorization. The company plans to pay a quarterly cash dividend of $0.25 per share in October 2026.
By raising third-quarter guidance while excluding China compute revenue, Nvidia links near-term growth to hyperscale AI infrastructure demand and export-control developments, placing the trajectory of operating expenses and China exposure at the center of investor scrutiny.
