Nvidia: a $96.2 billion quarter, read two ways

Key figure: NVDA Q2 FY27 revenue, $96.2B, up 106% from a year earlier. Source: NVIDIA earnings release, Aug. 26, 2026.[1]

The bull case

1. Revenue up 106%. Data Center revenue rose 117% to $89.0 billion. Third-quarter guidance is $108.0 billion, plus or minus 2%, with no Data Center compute revenue from China assumed.[1]
2. Revenue growth of about 70% expected in fiscal 2028. The CFO said on the earnings call that the outlook is supply-constrained.[6][8] Supply commitments rose to $279 billion from $119 billion.[2]
3. AI clouds, industrial and enterprise revenue up 138%, to $40.3 billion, about 45% of Data Center revenue.[2] The largest direct customer was 16% of revenue, versus 23% a year earlier.[3]
4. Margins widened. Gross margin was 75.0%, up from 72.4% a year earlier, and operating income rose 124% to $63.7 billion.[1] A Swissquote analyst said the outlook confirmed the “AI build-out will continue at full speed,” Reuters reported.[11]

The bear case

1. Gross margin guided to 71% to 72%. It was 75.0% in Q2 and is guided to 74.0% for the third quarter (ended Oct. 25).[1] The CFO expects margins to bottom at 71% to 72% in the fourth quarter.[6] Memory price increases “exceeded our prior expectations,” the CFO said.[6][9]
2. $108.5 billion in guarantees, including up to $105 billion for SB Energy’s campus leased to OpenAI.[2] One AI research and deployment company contributed “a meaningful amount” of revenue, the 10-Q says.[3]
3. Working capital rose. Days sales outstanding rose to 60 from 45 a quarter earlier.[2] Five direct customers owed 70% of $63.1 billion in receivables.[2][3]
4. China and the AI payoff. The 10-Q says Nvidia was “effectively foreclosed” from China’s data center compute market.[3] A Miller Tabak strategist told Reuters the AI payoff is “going to take a lot longer.”[10]

Exhibit 1. Data Center revenue rose to $89.0B in Q2 FY27. Quarterly revenue, $B; Q3 FY27 is the outlook midpoint (±2%). Source: NVIDIA CFO commentaries, Form 8-K. Chart: New Street.[4]

Exhibit 2. Gross margin is guided down to 71% to 72% from 75.0%. GAAP gross margin, %; axis starts at 55; outlook per Q2 release and call. Source: NVIDIA CFO commentaries, Form 8-K; Q2 earnings call. Chart: New Street.[4][6]

Market data: NVDA closed at $210.96 on Oct. 23 at 4 p.m. ET (StatMuse, StockAnalysis),[12][13] a market value of about $5.1T at that close, No. 1 among listed companies (StockAnalysis, CompaniesMarketCap).[14][15] Consensus fiscal 2027 adjusted EPS is about $9.3 (S&P Global via StockAnalysis; Dividend Data), a forward P/E of about 22.7 at that close.[16][17]

New Street calculations (from primary figures): AI clouds, industrial and enterprise share of Data Center = $40,313M / $89,023M = 45.3% [2]. Receivables held by five largest direct customers = 22% + 14% + 13% + 11% + 10% = 70% as of July 26, 2026 [3]. Q3 FY27 end date: the 10-K and 10-Q say the fiscal year ends the last Sunday in January, FY27 is a 53-week year with a 14-week fourth quarter, and Q3 is therefore 13 weeks from the July 26 Q2 end, i.e. Sunday, Oct. 25, 2026 [3][5]. “All other” in Exhibit 1 = total revenue minus Data Center revenue [4].