Second-quarter revenue rose 106% to $96.2bn ($92.2bn expected). Growth was driven by the Data Centre platform rising 117% to $89.0bn, with Edge Computing up 27% to $7.2bn.
Underlying operating profit rose 124% to $64.0bn ($60.9bn expected).
Free cash flow rose 59% to $21.3bn, while net cash, including leases, stood at $61.0bn at the end of the period.
The group returned $26.0bn to shareholders in share buybacks and dividends, with $99.0bn remaining in the current share repurchase programme.
Third-quarter revenue guidance is around $108.0bn ($105.1bn expected), with gross margins expected to be around 74%.
The shares were up 4.7% in after-hours trading.
Our view
The headline wasn't the quarter itself, strong as it was, but a fresh perspective on next year. Guidance for around 70% revenue growth came in well ahead of what the market had pencilled in, and that's a supply-constrained number. Customer forecasts point to demand growth of more than 100%. That's the new information from these results, and it should push earnings expectations sharply higher.
The new reporting split gives a clearer view of who's buying. Hyperscalers still matter enormously, but smaller AI cloud, industrial, enterprise and sovereign customers now make up nearly half of Data Centre revenue and are growing fast.
Breadth is underrated as well. Networking revenue is growing fast, and the move into CPUs with Vera adds another growth leg. Rivals sell parts of the stack, but few match a full data centre business at this scale.
Gross margins needed addressing, and the outlook is a little worse than hoped, with guidance pointing to a step down from 75% this quarter towards the low 70s by early next year. Memory prices have risen sharply, an input that sits at the core of Nvidia's AI racks, so immunity was never realistic. The shape of the guide suggests it's being managed well.
Two questions remain. Can the AI spending wave last, and will Nvidia stay dominant as AI shifts from training to everyday inference? We think it can last, given the breadth of use cases, customer spending plans and supply already committed. Getting the lower-cost, higher-performance Vera Rubin out on schedule will go a long way to proving the latter.
China sits outside our models and Nvidia's own guidance, though some sales are now moving. It's not back to being a dial mover yet, and any reopening would be upside. The cash story is building too. We forecast free cash flow above $200bn this financial year and, quite astonishingly, over $350bn for 2027. That should make buybacks a material part of the investment case from here, though nothing's guaranteed.
All in, we expect Nvidia’s dominance to continue. The shares trade at around 18 times forward earnings, below the average US company, implying earnings weakness that the numbers give no sign of. We expect a re-rating, though the timing is tricky to call. Even without one, earnings growth at this scale is a powerful tailwind the market can't ignore.
Key areas to monitor remain AI sentiment, investment plans from major customers, and market share concerns as competition ramps - all valid risks.
Environmental, social and governance (ESG) risk
The semiconductor sector is medium-risk in terms of ESG. Overall, this risk is managed adequately in Europe and North America but has considerable room for improvement in the Asia-Pacific region. Its reliance on highly specialised workers means labour relations is one of the key risk drivers. Other risks worth monitoring include resource use, business ethics, product governance, and carbon emissions.
According to Sustainalytics, Nvidia’s management of material ESG risks is strong.
As the market leader in power-hungry GPU processors ,it’s recognised for paying close attention to the energy efficiency of its products. Business ethics concerns are addressed by Nvidia’s compliance committee, which comprises the CFO and several other senior managers. Additionally, a third-party hotline is available for both employees and third-party stakeholders to anonymously submit ethical concerns. Its human capital initiatives are also strong, which is reassuring given the talent gap in the industry. However, diversity amongst the workforce could still be improved.
The author owns shares in NVIDIA.
Nvidia key facts
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This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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