Nvidia's Q2 Results Show 106% Year-Over-Year Growth; Q3 Guidance Points to $108 Billion

Nvidia reported second-quarter fiscal 2027 revenue of $96.2 billion, up 106% from a year earlier, confirming the chipmaker remains the primary beneficiary of AI infrastructure spending. The results, released August 26, beat consensus estimates of $92 billion and were driven by data-center revenue of $89 billion, a 117% year-over-year increase. For the current quarter ending in October, the company guided revenue of $108 billion, plus or minus 2%, with gross margins expected at 74%, plus or minus 50 basis points. The Q3 earnings call is scheduled for November 17.

What the numbers show

The quarter ended July 26 delivered 106% year-over-year revenue growth. Non-GAAP earnings per share rose 120% to $2.22. Gross margins held at 75%, up from 72.4% a year ago. Free cash flow for the quarter was $21.3 billion. Nvidia returned $26 billion to shareholders via buybacks and dividends, leaving $99 billion under its repurchase authorization.

Data-center revenue, which includes AI training and inference chips, networking, and software, accounted for 92% of total revenue. Edge computing revenue was $7.2 billion, up 27% year-over-year.

CEO Jensen Huang described the moment as an inflection point: “AI has reached its inflection point. It’s doing useful work. Its tokens are productive and profitable. Now, compute is revenue.” He cited a broadening customer base beyond a single lab, including new AI labs, startups, open-model ecosystems, and physical AI applications.

Supply commitments signal expected demand

A 10-Q filing revealed long-term supply and capacity agreements totaling $279 billion as of July 26, up from $119 billion three months earlier. The commitments are primarily for memory components and represent obligations to secure supply years in advance. Nvidia does not own the factories but is locking in a growing share of their output.

The increase doubles as a signal of how much demand Nvidia anticipates. The bear case is about flexibility: if AI spending cools, the obligations remain. Holding gross margins near 74% while absorbing these commitments will be a key test.

Hyperscaler spending remains high, but cash flow diverges

Cloud providers continue to ramp capital expenditure. Microsoft reported Azure growth of 48% with positive free cash flow. Amazon Web Services grew 39%, its fastest pace in roughly five years. Google Cloud doubled revenue to $30.7 billion and expanded operating margins to 36%. Meta and Amazon, however, posted negative free cash flow for the quarter and trailing twelve months, respectively. Meta plans up to $95 billion in new equity issuance; Amazon’s trailing free cash flow swung to -$42.4 billion.

Goldman Sachs estimates top-five hyperscaler capex at $800 billion in 2026, rising to $1.2 trillion in 2027. The IMF’s October Global Financial Stability Report identified about $1.4 trillion in future revenue commitments tied to circular financing arrangements where chip and cloud suppliers invest in customers who then buy their products.

Valuation and sentiment

Nvidia’s market capitalization stands near $5.1 trillion. The stock closed at $213.66 on October 29, down about 12% from its 52-week high of $243.37 on October 6 and up roughly 1% over the past 52 weeks. Forward price-to-earnings is 22.9 times, slightly above the industry average of 22.3 times.

Analyst sentiment remains strongly positive: 48 of 52 rate the stock a “Strong Buy,” with an average price target of $328.75 (61% upside) and a high of $515 (152% upside). Needham and Cantor Fitzgerald reiterated Buy/Overweight ratings with targets of $300 and $350 respectively.

New retail access, unproven impact

Indian trading platforms Groww (29% of 46 million active investors), Zerodha (15%), and Angel One (6.7 million clients) are rolling out U.S. equity access. Nvidia is among the most popular names on Groww. While this expands the potential investor base, the article notes that Indian retail flows must grow into a large, persistent stream to materially affect a stock of Nvidia’s size.

What comes next

The Q3 earnings call on November 17 will provide the first reported numbers for the quarter ended October 2026. Investors will watch whether revenue exceeds the $108 billion midpoint, how management characterizes the supply commitments, and the contribution from the Vera Rubin platform now ramping into production. Also pending: a reported U.S. Justice Department inquiry into Nvidia’s $12.9 billion Hugging Face deal and reports that OpenAI plans to purchase Google’s TPU chips.

The broader AI funding environment remains a live question. The Fed held rates on October 28 with two dissents favoring a hike; markets price an 84-85% chance of a December increase. The 10-year Treasury yield closed at 4.99% on October 29. The IMF modeled a downside scenario where a sharp drop in AI investment cuts world GDP by 1.1% by 2028.

What we don’t know

Actual Q3 results are not yet public. The extent to which hyperscaler capex translates into sustainable revenue for Nvidia versus inventory buildup is unclear. The impact of potential export restrictions on China data-center revenue—excluded from guidance—remains unspecified. The magnitude and durability of new retail flows from India are unquantified.