NVIDIA (NVDA) — Q2 FY2027 Earnings Review
Published · Data as of 2026-10-19 close; filings through 2026-10-20. Figures are as of the dates shown and will not be updated.
How this report was made. An AI research agent (Claude Code running Anthropic's open-source finance skills, adapted by bests.one) produced this report on 2026-10-20 using only free data: SEC EDGAR filings and XBRL, FRED, and unofficial Yahoo Finance prices. Web-sourced figures (analyst consensus, call commentary) are tagged
[WEB]with provider, date and link; a separate checking pass confirmed all 2 against the original pages. A separate AI checking pass compared 24 of 24 figures with the original sources (SEC filings, FRED); all matched except where noted. Reviewed by bests.one on 2026-10-20. The run took about 2 minutes and cost about $0.54 in compute. Read the method: How we test.Educational sample, not investment advice. Nothing here is a recommendation to buy, sell or hold any security. bests.one is independent and not affiliated with NVIDIA, Microsoft, Manhattan Associates, Anthropic, or any data provider mentioned.
Quarter: Q2 FY2027, ended 2026-07-26 (reported 2026-08-26) | Analysis date: 2026-10-20 | Price: $217.09 (close 2026-10-19) Units: $ in millions unless stated; per-share in $; shares in millions. NVDA's fiscal year ends in late January (FY2027 ends Jan 2027).
SEC-verified vs web-sourced. Every financial figure below comes from SEC filings or XBRL via us-free-finance, unless tagged
[WEB]. Prices are Yahoo Finance chart data (unofficial). The only web-sourced numbers are the consensus figures in section 2b. Not reviewed: the 10-Q MD&A/risk factors (I used the 8-K press release, the CFO commentary and XBRL) and the earnings-call Q&A (no transcript was read).
1. Summary / key takeaways
- Revenue was $96.2B, up 18% QoQ and 106% YoY. That is 5.7% above the midpoint of the company's own $91.0B ±2% guide, and above the top of the range ($92.8B).
- Margins held. GAAP and non-GAAP gross margin were 75.0%, inside the 74.9%/75.0% ±50bp guide. GAAP operating margin was 66.2%, from 65.6% in Q1 and 60.8% a year ago.
- Mix is shifting toward AI clouds, industrial and enterprise (ACIE). ACIE grew 25% QoQ and 138% YoY to $40.3B, versus Hyperscale at +13% QoQ and +102% YoY to $48.7B. ACIE is now 42% of revenue.
- Cash conversion was weak this quarter. Operating cash flow was $24.1B, down from $50.3B in Q1. Receivables rose $22.3B and DSO went from 45 to 60 days, which management attributes to "extended payment terms on large, multi-quarter agreements with certain investment-grade customers" (EX-99.2). Inventory rose to $31.6B ahead of Vera Rubin.
- Off-balance-sheet obligations grew sharply. Supply commitments rose from $119B to $279B (mostly memory), and guarantees reach up to $108.5B, including up to $105B tied to SB Energy / OpenAI (PORTS-Pike). Free data cannot judge counterparty risk on these.
- Q3 guide: revenue of $108.0B ±2% (+12% QoQ), gross margin of 74.0% ±50bp, and no China Data Center compute revenue assumed.
- GAAP EPS is flattered by investment gains. GAAP EPS of $2.46 includes $7.8B of equity-securities gains. Non-GAAP EPS was $2.22.
2. Results vs guidance and vs prior periods
2a. Actual vs company guidance (Q1 FY27 release, filed 2026-05-20) — SEC-verified
| Metric | Guidance for Q2 | Actual | Result |
|---|---|---|---|
| Revenue | $91.0B ±2% ($89.2–92.8B) | $96.2B | +5.7% vs midpoint, above the range |
| GAAP gross margin | 74.9% ±50bp | 75.0% | In line |
| Non-GAAP gross margin | 75.0% ±50bp | 75.0% | In line |
| GAAP opex | ~$8.5B | $8.41B | Slightly below |
| Non-GAAP opex | ~$8.3B | $8.23B | Slightly below |
| FY27 tax rate | 16–18% | 16.5% GAAP quarter | Within range |
Sources: guidance from Q1 FY27 EX-99.1 (8-K filed 2026-05-20). Actuals from Q2 FY27 EX-99.1 (8-K filed 2026-08-26).
2b. vs consensus [WEB] — partly verified, treat with caution
| Metric | Consensus found | Source | Status |
|---|---|---|---|
| Revenue | ~$91.7–92.2B | [WEB: Visible Alpha / Zacks (the article does not say which figure belongs to which), 2026-08-26, https://investinglive.com/stocks/preview-nvidia-reports-q2-results-today-guidance-implies-revenue-near-91-billion/] | Page read, pre-release |
| Adjusted EPS | ~$2.08 | Same page | Page read, pre-release |
| Revenue / non-GAAP EPS / Data Center / Q3 guide | $92.17B (LSEG), $2.10, ~$86.3B (StreetAccount), ~$104.2B (LSEG) | Webull and INDmoney, via search snippets | Search snippet only, not verified (the Webull page body would not load). Not relied on. |
Only one source was read, so no two-provider cross-check was possible. On that source's basis, the $96.2B revenue is about 4–5% above consensus. The $2.22 non-GAAP EPS is about 7% above if the basis matches, but NVDA changed its non-GAAP definition in Q1 FY27: it now includes stock-based compensation, so the basis may differ from the one analysts used. Not found in free sources: gross-margin and segment consensus.
2c. vs prior periods — SEC-verified (GAAP unless noted)
| $M | Q2 FY27 | Q1 FY27 | Q2 FY26 | QoQ | YoY |
|---|---|---|---|---|---|
| Revenue | 96,221 | 81,615 | 46,743 | +18% | +106% |
| Gross profit | 72,142 | 61,157 | 33,853 | +18% | +113% |
| Gross margin | 75.0% | 74.9% | 72.4% | +0.1pt | +2.6pt |
| Opex | 8,408 | 7,621 | 5,413 | +10% | +55% |
| Operating income | 63,734 | 53,536 | 28,440 | +19% | +124% |
| Operating margin | 66.2% | 65.6% | 60.8% | +0.6pt | +5.4pt |
| Other income, net | 7,773 | 16,367 | 2,766 | ||
| Net income | 59,688 | 58,321 | 26,422 | +2% | +126% |
| Diluted EPS ($) | 2.46 | 2.39 | 1.08 | +3% | +128% |
| Non-GAAP EPS ($) | 2.22 | 1.87 | 1.01 | +19% | +120% |
Sources: income statement and non-GAAP reconciliation in Q2 EX-99.1, filed 2026-08-26. Revenue, operating income and EPS cross-checked to XBRL tags Revenues, OperatingIncomeLoss and EarningsPerShareDiluted in 10-Q filed 2026-08-26. Q1 FY27 net income was lifted by $15.9B of equity gains.
3. Segment and driver analysis
| $M | Q2 FY27 | Q1 FY27 | Q2 FY26 | QoQ | YoY | % of Q2 revenue |
|---|---|---|---|---|---|---|
| Data Center | 89,023 | 75,246 | 41,096 | +18% | +117% | 92.5% |
| – Hyperscale | 48,710 | 43,050 | 24,168 | +13% | +102% | 50.6% |
| – ACIE (AI Clouds, Industrial & Enterprise) | 40,313 | 32,196 | 16,928 | +25% | +138% | 41.9% |
| Edge Computing | 7,198 | 6,369 | 5,647 | +13% | +27% | 7.5% |
| Segment: Compute & Networking | 88,299 | 74,550 | 41,331 | +18% | +114% | |
| Segment: Graphics | 7,922 | 7,065 | 5,412 | +12% | +46% |
Source: CFO Commentary, EX-99.2, filed 2026-08-26.
- New reporting framework. From Q1 FY27 NVDA reports Data Center (split into Hyperscale and ACIE) and Edge Computing, and no longer gives the compute/networking split (Q1 EX-99.1). Prior periods are recast. In Q2 a company was moved from ACIE to Hyperscale and the prior periods were recast, so Hyperscale vs ACIE trends are not strictly comparable with earlier disclosures.
- Drivers per management (EX-99.2). Data Center growth came from the Blackwell Ultra ramp. ACIE demand came from "AI natives, enterprises, and sovereign customers, as well as hyperscalers utilizing AI clouds." Edge growth came from Blackwell workstations, partly offset by weaker consumer PCs because of elevated memory and system prices.
- China. Hopper shipments to China were under 1% of Data Center revenue, and the Q3 guide assumes no China Data Center compute revenue. China is an option, not a base case.
- Financing-linked demand. The release cites partnerships with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to mobilize over $500B of third-party capital, "subject to definitive agreements." CFO commentary says NVDA will earn revenue on the upfront sale of infrastructure to AI clouds and may share in their revenue, and that it provides land/power/shell credit support. This links NVDA's revenue to customer financing conditions.
4. Margins and cash flow
- Gross margin was flat QoQ at about 75%. Q3 is guided down to 74.0% ±50bp, roughly 100bp lower than Q2. The source does not give the reason, so I treat it as unexplained (see gaps).
- Opex grew 55% YoY, below revenue growth, so operating leverage continues. R&D was $7,054M (+64% YoY) and SG&A was $1,354M (+21%). Q3 opex is guided to $9.2B GAAP, +9% QoQ.
- Below the line. Other income of $7.8B is almost all equity-securities gains ($7,771M). Excluding it, Q2 pre-tax income would have been about $63.7B. NVDA holds $42.8B of marketable equity and $51.2B of non-marketable securities (balance sheet, EX-99.1), so GAAP earnings are exposed to mark-to-market swings. Interest expense rose to $227M from $73M two quarters earlier (XBRL
InterestExpenseNonoperating), reflecting the $25.0B notes issued in Q2. - Cash flow ($M):
| Q2 FY27 | Q1 FY27 | Q2 FY26 | TTM | |
|---|---|---|---|---|
| Operating cash flow | 24,077 | 50,344 | 15,365 | 134,360 |
| Capex (PP&E + intangibles) | 2,677 | 1,757 | 1,894 | 7,354 |
| Company-defined FCF | 21,341 | 48,554 | 13,450 | |
XBRL-derived FCF (CFO − PaymentsToAcquireProductiveAssets) | 21,400 | 48,587 | 13,470 | 127,006 |
Company FCF also deducts principal payments on property and equipment and intangibles, which explains the small gap to the XBRL-derived figure. The Q2 cash-flow quarter is derived (6M YTD − 3M YTD) in the XBRL series. Q2 FCF equals 36% of GAAP net income and 40% of non-GAAP net income. The drivers were receivables (−$22.3B), inventory (−$5.8B) and prepaids/other assets (−$5.5B), plus cash taxes (EX-99.2).
- Capital return and balance sheet. The company returned about $26.0B in the quarter ($19.7B buybacks plus $6.0B dividends after the dividend was raised to $0.25/quarter). About $99.0B remains under the buyback authorization. Cash and marketable debt securities were $56.6B, and debt was $33.4B ($1.0B short-term, $32.4B long-term).
Sources: Q2 EX-99.1 and EX-99.2, filed 2026-08-26; XBRL NetCashProvidedByUsedInOperatingActivities and PaymentsToAcquireProductiveAssets, 10-Q filed 2026-08-26.
5. Guidance and outlook (Q3 FY27, from the 2026-08-26 release)
| Item | Guidance | Implied |
|---|---|---|
| Revenue | $108.0B ±2% ($105.8–110.2B) | +12.2% QoQ; +89% YoY vs Q3 FY26 revenue of $57.0B |
| Gross margin (GAAP and non-GAAP) | 74.0% ±50bp | −1.0pt QoQ |
| Opex GAAP / non-GAAP | ~$9.2B / ~$9.0B | +9% / +9% QoQ |
| Implied GAAP operating income (my arithmetic at midpoints) | ≈ $70.7B | ≈ 65.5% margin |
| FY27 tax rate | 16–18% | |
| China Data Center compute | none assumed |
The guide implies sequential growth slowing from 18% to about 12%. Q2 beat the midpoint of its guide by 5.7%; I did not retrieve the Q4 FY26 release, so I cannot say whether Q1 also beat, and a beat pattern is confirmed for Q2 only. Management's verbal guidance (call) was not reviewed. A search snippet mentioned about 70% growth for fiscal 2028 [snippet only, not verified, not relied on].
6. Thesis implications (conditions, not a rating)
- Supports the demand/margin leg of an "AI infrastructure build-out" thesis: revenue above the guide range, stable 75% gross margin, 66% operating margin, a Q3 guide of $108B, and broadening demand (ACIE +138% YoY).
- What would strengthen it: DSO and operating cash flow returning toward earnings; Vera Rubin ramp on schedule (inventory was built for it, with the Q3 gross-margin guide of 74% as the first check); evidence that third-party capital programs ($500B headline) convert to definitive agreements.
- What would weaken it: receivables or DSO continuing to rise; customer financing tightening; gross margin falling below the guide; the guarantee book (up to $108.5B) or the $279B supply commitments becoming a burden if demand slips.
- Quality of earnings: use non-GAAP or operating income rather than GAAP EPS when judging run-rate, because of $7.8B (Q2) and $15.9B (Q1) of equity gains.
7. Risks (from the filings reviewed)
- Customer concentration and financing circularity. NVDA invests in AI model makers and AI clouds, and also sells to them (EX-99.2 equity-investment and AI-cloud commitments of $25B and $36B). The concentration share for the top customers sits in the 10-Q, which I did not read.
- Supply commitments of $279B, of which $92B fall in the rest of FY27 and $87–88B in each of FY28 and FY29, are mostly memory, with price risk.
- Guarantee exposure of $108.5B maximum (EX-99.2), triggered by customer default.
- Working-capital stretch. DSO of 60 days (from 45) on extended terms.
- China. Excluded from guidance; policy-dependent.
- Mark-to-market earnings volatility on a $94B equity portfolio (marketable plus non-marketable).
- Valuation sensitivity (section 8).
8. Valuation snapshot (LTM; no forward multiples found)
Price $217.09, Yahoo Finance chart data (unofficial), as of 2026-10-19 close. Shares 24,100M from the 10-Q cover page (as of 2026-08-21), so market cap is about $5,232B. The 52-week range is $164.27–$243.37.
| Metric (TTM to Q2 FY27, $B) | Value | Multiple |
|---|---|---|
| Revenue | 303.0 | EV/Revenue 17.2x |
| Operating income (GAAP) | 197.6 | EV/EBIT 26.4x |
| Net income (GAAP, incl. equity gains) | 192.9 | P/E 27.1x |
| Free cash flow (CFO − capex) | 127.0 | Market cap/FCF 41.2x |
EV ≈ $5,209B = market cap − cash and marketable debt securities ($56.6B) + debt ($33.4B). It does not deduct marketable equity ($42.8B) or non-marketable securities ($51.2B). Operating leases are excluded. GAAP P/E is inflated in "quality" terms by investment gains. TTM data is the sum of four quarters (FY26 Q3 + Q4 and FY27 Q1 + Q2), where FY26 Q4 is derived (FY − 9M YTD). Forward multiples and peer comparisons are not done here; run get_peer_candidates / get_comps_snapshot if a peer set is wanted.
9. Data gaps
- Consensus: only one pre-release source was read, with an ambiguous provider and no gross-margin or segment figures. LSEG, StreetAccount and Reuters figures were seen only in snippets.
- Earnings-call transcript and Q&A: not reviewed. Verbal guidance, including any FY28 commentary, is unverified.
- 10-Q MD&A, customer concentration, and the risk-factor changes: not read.
- Reason for the Q3 gross-margin step-down to 74%: not stated in the filings I read.
- The Q1 and earlier results beat/miss history versus guidance: not computed beyond Q2.
- Price reaction after the report, forward multiples, ratings and price targets: not available in free data and not provided.
- Recast Hyperscale/ACIE history before Q2 FY26: not retrieved.
10. Sources
SEC filings (EDGAR)
- 8-K, Q2 FY27 earnings release EX-99.1, filed 2026-08-26: https://www.sec.gov/Archives/edgar/data/1045810/000104581026000073/q2fy27pr.htm
- 8-K EX-99.2 CFO commentary, filed 2026-08-26: https://www.sec.gov/Archives/edgar/data/1045810/000104581026000073/q2fy27cfocommentary.htm
- 8-K, Q1 FY27 earnings release EX-99.1 (prior guidance), filed 2026-05-20: https://www.sec.gov/Archives/edgar/data/1045810/000104581026000051/q1fy27pr.htm
- 10-Q for the quarter ended 2026-07-26, filed 2026-08-26 (XBRL:
Revenues,OperatingIncomeLoss,NetIncomeLoss,EarningsPerShareDiluted,NetCashProvidedByUsedInOperatingActivities,PaymentsToAcquireProductiveAssets,InterestExpenseNonoperating; also share count): https://www.sec.gov/Archives/edgar/data/1045810/000104581026000075/0001045810-26-000075-index.htm - 10-Q for the quarter ended 2026-04-26, filed 2026-05-20, and 10-K filed 2026-02-25 (XBRL quarterly history): https://www.sec.gov/Archives/edgar/data/1045810/000104581026000052/0001045810-26-000052-index.htm and https://www.sec.gov/Archives/edgar/data/1045810/000104581026000021/0001045810-26-000021-index.htm
FRED / Yahoo
- Yahoo Finance chart data (unofficial), NVDA quote, retrieved 2026-10-20. No FRED series were used.
Web
- investinglive.com, "Preview: Nvidia reports Q2 results today…", published 2026-08-26 (read via WebFetch, accessed 2026-10-20): https://investinglive.com/stocks/preview-nvidia-reports-q2-results-today-guidance-implies-revenue-near-91-billion/
- Search snippets only, not verified, not relied on: Webull (https://www.webull.com/blog/304-Nvidia-Q2-FY2027-Earnings-Beats-Revenue-EPS-Estimates-Guides-Q3-to-108B) and INDmoney (https://www.indmoney.com/blog/us-stocks/nvda-stock-rises-nvidia-q2-earnings-analysis).
Research draft based on free public data (SEC EDGAR, FRED, Yahoo Finance and the web sources listed); not investment advice.