Why Is Nvidia (NVDA) Down 1.4% Since Last Earnings Report?

Core Viewpoint - Nvidia reported strong second-quarter fiscal 2026 results, with revenues and earnings exceeding expectations, driven by robust growth across all end markets and lower operating expenses [2][3][18]. Financial Performance - Non-GAAP earnings per share for Q2 fiscal 2026 were $1.05, surpassing the Zacks Consensus Estimate by 5%, and reflecting a 54% year-over-year increase and a 30% sequential increase [2]. - Total revenues for Q2 fiscal 2026 reached $46.74 billion, marking a 56% year-over-year increase and a 6% sequential increase, beating the consensus mark by 1.3% [3]. - Non-GAAP gross margin was 72.7%, down 3 percentage points year over year but up 11.7 percentage points sequentially [12]. Segment Performance - The Graphics segment contributed 11.6% of total revenues, with revenues increasing 51% year over year to $5.41 billion, exceeding the consensus estimate of $4.75 billion [5]. - Compute & Networking segment represented 88.4% of total revenues, with revenues soaring 56% year over year to $41.33 billion, surpassing the consensus estimate of $40.49 billion [6]. - Data Center revenues, a key component of Compute & Networking, accounted for 87.9% of total revenues, increasing 56% year over year to $41.1 billion, driven by demand for Blackwell GPU computing platforms [7]. Market Insights - Gaming revenues rose 49% year over year to $4.29 billion, reflecting strong demand from gamers and AI enthusiasts, and exceeding the consensus estimate of $3.83 billion [8]. - Professional Visualization revenues increased 32% year over year to $601 million, surpassing the consensus estimate of $524.8 million [9]. - Automotive sales totaled $586 million, up 69% year over year, driven by the adoption of self-driving platforms, exceeding the consensus estimate of $573.4 million [10]. Cash Flow and Shareholder Returns - Operating cash flow for Q2 was $15.37 billion, with free cash flow of $13.45 billion [16]. - The company returned $244 million to shareholders through dividends and repurchased $9.72 billion in stock during the quarter [17]. - A new $60 billion share repurchase authorization was approved, increasing the total limit to $74.7 billion [17]. Guidance and Market Outlook - For Q3 fiscal 2026, Nvidia anticipates revenues of $54 billion (+/-2%) and a non-GAAP gross margin of 73.5% (+/-50 bps) [18]. - Recent estimates have trended upward, with a 5.54% shift in consensus estimates [19]. - Nvidia holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [22].