Leading designer of graphics chips Nvidia (NASDAQ: NVDA) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 106% year on year to $96.22 billion. On top of that, next quarter’s revenue guidance ($108 billion at the midpoint) was surprisingly good and 3.3% above what analysts were expecting. Its non-GAAP profit of $2.22 per share was 6.1% above analysts’ consensus estimates.
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Nvidia (NVDA) Q2 CY2026 Highlights:
- Revenue: $96.22 billion vs analyst estimates of $92.37 billion (106% year-on-year growth, 4.2% beat)
- Adjusted EPS: $2.22 vs analyst estimates of $2.09 (6.1% beat)
- Adjusted Operating Income: $63.96 billion vs analyst estimates of $61.01 billion (66.5% margin, 4.8% beat)
- Revenue Guidance for Q3 CY2026 is $108 billion at the midpoint, above analyst estimates of $104.6 billion
- Operating Margin: 66.2%, up from 60.8% in the same quarter last year
- Free Cash Flow Margin: 22.2%, down from 28.8% in the same quarter last year
- Inventory Days Outstanding: 119, up from 115 in the previous quarter
- Market Capitalization: $5.16 trillion
“AI has reached its inflection point. It’s doing useful work. Its tokens are productive and profitable. Now, compute is revenue,” said Jensen Huang, founder and CEO of NVIDIA. “And demand is accelerating. This time last year, one lab alone was driving the buildout; today, we have a golden age of new AI labs and startups, multiple frontier labs scaling in parallel, a thriving open-model ecosystem and physical AI coming online — with strong momentum across the U.S. and around the world. The AI infrastructure buildout is at full steam. Vera Rubin, now in full production, was built to power exactly this moment.”
Company Overview
Founded in 1993 by Jensen Huang and two former Sun Microsystems engineers, Nvidia (NASDAQ: NVDA) is a leading fabless designer of chips used in gaming, PCs, data centers, automotive, and a variety of end markets.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Nvidia’s sales grew at an incredible 69.1% compounded annual growth rate over the last five years. Its growth surpassed the average semiconductor company and shows its offerings resonate with customers, a great starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions (which can sometimes offer opportune times to buy).
Long-term growth is the most important, but short-term results matter for semiconductors because the rapid pace of technological innovation (Moore’s Law) could make yesterday’s hit product obsolete today. Nvidia’s annualized revenue growth of 77.4% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. 
This quarter, Nvidia reported magnificent year-on-year revenue growth of 106%, and its $96.22 billion of revenue beat Wall Street’s estimates by 4.2%. Beyond the beat, this marks 13 straight quarters of growth, showing that the current upcycle has had a good run - a typical upcycle usually lasts 8-10 quarters. Company management is currently guiding for a 89.5% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 60.3% over the next 12 months, a deceleration versus the last two years. Still, this projection is eye-popping given its scale and implies the market is forecasting success for its products and services.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’s capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Nvidia’s DIO came in at 119, which is 10 days above its five-year average, suggesting that the company’s inventory has grown to higher levels than we’ve seen in the past.
Key Takeaways from Nvidia’s Q2 Results
It was good to see Nvidia beat analysts’ EPS expectations this quarter. We were also glad its operating income outperformed Wall Street’s estimates. On the other hand, its inventory levels increased. Overall, we think this was a decent quarter with some key metrics above expectations. The market seemed to be hoping for more, and the stock traded down 1.5% to $206.72 immediately following the results.
Should you buy the stock or not? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
