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Nvidia(NVDA) - 2026 Q2 - Earnings Call Transcript
NvidiaNvidia(US:NVDA)2025-08-27 22:00

Financial Data and Key Metrics Changes - Total revenue for Q2 2026 was $46.7 billion, exceeding expectations and showing sequential growth across all market platforms [5][32] - Data center revenue grew 56% year-over-year, despite a $4 billion decline in H20 revenue [5][12] - GAAP gross margin was 72.4%, while non-GAAP gross margin was 72.7%, benefiting from previously reserved H20 inventory [30][32] Business Line Data and Key Metrics Changes - Data center revenue reached record levels, with the Blackwell platform growing sequentially by 17% [6][19] - Gaming revenue was a record $4.3 billion, a 14% sequential increase and a 49% year-over-year increase, driven by the ramp of Blackwell GeForce GPUs [24][25] - Professional visualization revenue increased by 32% year-over-year, reaching $601 million, fueled by high-end RTX workstation GPUs [27] Market Data and Key Metrics Changes - China represented a low single-digit percentage of data center revenue, while Singapore accounted for 22% of billed revenue, primarily from US-based customers [24] - Networking revenue reached a record $7.3 billion, with a 46% sequential and 98% year-over-year increase [19][20] Company Strategy and Development Direction - The company is focused on capitalizing on the AI infrastructure opportunity, estimating $3 to $4 trillion in spending by the end of the decade [6][42] - The transition to the GB300 architecture is seamless, allowing for easy deployment by cloud service providers [7][10] - The company aims to maintain its leadership in AI technology and compete globally, emphasizing the importance of developer support [12][54] Management's Comments on Operating Environment and Future Outlook - Management highlighted the significant growth potential driven by reasoning agentic AI and the increasing demand for AI infrastructure [39][60] - The geopolitical environment remains a concern, particularly regarding H20 shipments to China, with potential revenue of $2 billion to $5 billion if issues are resolved [11][46] - The company expects total revenue for Q3 2026 to be around $54 billion, with continued growth in data center and networking segments [32][33] Other Important Information - The company returned $10 billion to shareholders through share repurchases and dividends, with a new $60 billion share repurchase authorization approved [31] - The company is on track to achieve over $20 billion in sovereign AI revenue this year, more than double that of last year [19] Q&A Session Summary Question: What is the vision for growth into 2026? - Management emphasized the growth drivers from reasoning agentic AI and the significant increase in computation requirements for these models [38][42] Question: What needs to happen for H20 shipments to China? - Management indicated that geopolitical issues need resolution, and there is potential for $2 billion to $5 billion in shipments if licenses are approved [46][47] Question: How does NVIDIA view the competitive landscape with ASICs? - Management noted that while many ASIC projects are initiated, few reach production due to the complexity of accelerated computing compared to general-purpose computing [48][50] Question: What is the opportunity for Spectrum XGS? - Management highlighted that Spectrum XGS is crucial for connecting multiple data centers and AI factories, with significant revenue potential [73][78] Question: How will revenue be apportioned across Blackwell, Hopper, and networking? - Management stated that Blackwell will drive the majority of growth, with continued sales of Hopper systems [80][81] Question: What is the long-term outlook for the China market? - Management estimated a $50 billion opportunity in China this year, with potential for 50% annual growth [67][70]