Nvidia Reports Strong Q2 Earnings with $46.7 Billion Revenue Driven by AI Chip Demand
Nvidia Corporation announced robust financial results for the second quarter of fiscal 2026, with revenue reaching $46.7 billion — a 56% increase from the prior year — fueled by surging demand for its artificial intelligence (AI) chips.
This growth outperformed analyst expectations, which had predicted $46.2 billion in sales, and also surpassed Nvidia’s internal guidance of $45 billion. The revenue growth is significant amid uncertainty and geopolitical challenges affecting chip sales in China.
Outstanding AI Platform and Product Demand
Nvidia’s CEO and founder Jensen Huang highlighted the company’s Blackwell AI platform, particularly the Blackwell Ultra system, as a key driver behind the extraordinary demand. Production of Blackwell Ultra is ramping up at full speed, meeting the needs of customers deploying reasoning AI models requiring drastic improvements in training and inference performance.
“The AI race is on, and Blackwell is the platform at its center,” Huang remarked, underscoring Nvidia’s competitive position in the rapidly expanding AI industry.
Financial Highlights
- Revenue: $46.7 billion, a 6% increase quarter-over-quarter and 56% year-over-year.
- Gross Margins: GAAP margin at 72.4%, non-GAAP margin at 72.7%.
- Earnings Per Share: GAAP diluted EPS of $1.08, non-GAAP diluted EPS of $1.05.
- Blackwell Data Center revenue: Up 17% sequentially.
Nvidia noted contributing sales included a $180 million release from previously reserved H20 inventory and about $650 million in non-China H20 sales. However, there were no sales of H20 chips to China-based customers in this quarter.
Geopolitical Challenges and China Market Impact
Amid regulatory hurdles, Nvidia has experienced fluctuating China sales. Earlier restrictions were imposed by former President Donald Trump barring chip exports to China. Recently, an agreement allows Nvidia to sell chips in China, provided it transfers 15% of the revenue from those sales to the U.S. government.
These developments inject volatility into Nvidia’s revenue projections, especially regarding the sizable China market. Despite this, Nvidia continues to focus on U.S. cloud customers and a growing global AI market.
Market Outlook and Growth Expectations
Looking ahead, Nvidia projects third-quarter revenue of approximately $54 billion, representing an expected 54% year-over-year increase. The company anticipates the global AI market will maintain a 50% growth rate, supported by ongoing spending on AI data center infrastructure.
Management estimates cumulative data center capital expenditures could reach up to $4 trillion over the decade, with Nvidia currently capturing roughly one-third of this market, indicative of sustained growth opportunities.
Investor Reaction and Market Position
Despite the strong earnings beat, Nvidia’s stock saw a modest sell-off, which some analysts attributed to revenue growth not surpassing FactSet Consensus estimates by the margins seen in previous quarters. However, market watchers view the dip as a buying opportunity given Nvidia’s dominant AI chip position and accelerating supply of new AI hardware products.
Overall, Nvidia’s earnings demonstrate no signs of slowing demand, affirming its leadership in the chip sector powering the AI revolution.