Nvidia Surges Ahead with Robust Earnings and AI Demand Forecast

Nvidia reports better-than-expected earnings and revenue for the second quarter of 2026, with a strong outlook for continued growth in artificial intelligence (AI) infrastructure. The company's stock initially slips in extended trading but recovers as it issues guidance that surpasses analyst estimates.

The tech giant beats both earnings and revenue expectations, with adjusted earnings per share (EPS) at $1.05 compared to the estimated $1.01, and revenue at $46.74 billion, exceeding the expected $46.06 billion. Nvidia projects revenue for the current quarter to be $54 billion, plus or minus 2%, which is higher than the $53.1 billion anticipated by analysts.

Key Financial Highlights

Nvidia's overall revenue surges 56% year-over-year, reaching $46.74 billion. This marks the ninth consecutive quarter of over 50% year-over-year growth, starting from mid-2023 when the generative AI boom began. Net income climbs 59% to $26.42 billion, or $1.08 per share, up from $16.6 billion, or 67 cents per share, in the same period last year.

The data center business, a key driver of Nvidia's growth, sees a 56% increase in revenue to $41.1 billion. However, this falls slightly short of the StreetAccount estimate of $41.34 billion. Nvidia's finance chief, Colette Kress, notes that $33.8 billion of the data center sales were for 'compute,' or GPU chips, which declined 1% from the first quarter due to the absence of H20 chip sales in China. Networking parts, necessary for building more complex systems, generated $7.3 billion in sales, nearly doubling from the previous year.

Geopolitical Impact and Future Outlook

Nvidia did not sell any H20 processors to China-based customers during the quarter. However, the company benefited from the release of $180 million worth of H20 inventory to a client outside of China. Kress indicates that Nvidia could potentially ship between $2 billion and $5 billion in H20 revenue during the quarter if the geopolitical environment allows.

CEO Jensen Huang met with President Donald Trump, signaling potential U.S. licenses to ship the H20 chip to China. The H20 processor, custom-built for sales to China, cost Nvidia $4.5 billion in write-downs and could have added $8 billion in second-quarter sales if it had been commercially available.

Industry Context and Implications

Nvidia's robust performance comes as major tech companies, including Meta, Alphabet, Microsoft, and Amazon, are investing heavily in AI infrastructure. These companies are spending tens of billions of dollars each quarter on building out their AI capabilities, driving demand for Nvidia's GPUs and complementary products.

Kress tells analysts on an earnings call that the company expects between $3 trillion and $4 trillion in AI infrastructure spending by the end of the decade. This forecast underscores the significant long-term growth potential for Nvidia and the broader AI industry.

In addition to its data center business, Nvidia's gaming division reports $4.3 billion in sales, up 49% from the year-ago period. The company also highlights its new product line, which reached $27 billion in sales, accounting for about 70% of data center revenue.

Forward-Looking Information

Nvidia's strong financial performance and optimistic outlook for AI infrastructure spending position the company well for continued growth. As the global AI buildout intensifies, Nvidia remains a key player, benefiting from the ongoing demand for high-performance computing and AI solutions.

References

1. Nvidia beats on top and bottom lines as company expects breakneck AI spend to continue