SAN FRANCISCO: Nvidia reported better-than-expected earnings and revenue on Wednesday, signaling to Wall Street that the demand for artificial intelligence infrastructure remains robust, despite a slowdown in its key data center segment.
The company’s stock, which has seen a 35% increase this year after nearly tripling in 2024, slipped in extended trading after data center revenue fell short of analyst estimates for the second consecutive quarter.
Nvidia’s financial results for its second fiscal quarter of 2026, compared with analyst estimates polled by LSEG, were as follows:
- Adjusted Earnings per Share: $1.05 vs. $1.01 estimated
- Revenue: $46.74 billion vs. $46.06 billion estimated
The company’s overall revenue rose 56% to $46.74 billion from $30.04 billion a year ago. This marks the ninth straight quarter of revenue growth exceeding 50% since the generative AI boom began in mid-2023, though it was the slowest growth rate during that period.
Nvidia also offered an optimistic outlook for the current quarter, projecting revenue of $54 billion, plus or minus 2%. This forecast is higher than the $53.1 billion analysts were expecting, according to LSEG, and doesn’t account for any H20 chip shipments to China.
In a statement, Nvidia finance chief Colette Kress affirmed the company’s central role in the global AI buildout, telling analysts the company expects AI infrastructure spending to reach between $3 trillion and $4 trillion by the end of the decade.
Data Center Business Remains Core, But Faces Headwinds
Nvidia’s growth is predominantly fueled by its data center business, which centers on graphics processors, or GPUs, and related components. This division saw a 56% increase in revenue year-over-year, reaching $41.1 billion. However, this figure came in just under the StreetAccount estimate of $41.34 billion.
Kress explained that $33.8 billion of the data center sales were from “compute” — or GPU chips — which saw a 1% decline from the previous quarter. This was largely due to a $4 billion reduction in sales from the custom-built H20 chip for China. Sales of networking parts, critical for building more complex systems, nearly doubled to $7.3 billion.
The company’s Blackwell chips, its latest generation, now account for about 70% of data center revenue. Nvidia reported that sales of these chips increased by 17% from the first quarter.
Geopolitical Environment Affects Sales
Nvidia previously said the lack of commercial availability of its H20 chips for China cost the company $4.5 billion in writedowns and could have added an estimated $8 billion in second-quarter sales. The company sold no H20 chips to China during the quarter but did benefit from a $180 million release of H20 inventory to a customer outside of China.
Kress noted that if geopolitical conditions permit, the company could see between $2 billion and $5 billion in H20 revenue during the current quarter.
Other Divisions and Share Repurchase Plan
Nvidia’s gaming division, once its largest, reported $4.3 billion in sales, a 49% increase from the year-ago period. The company recently announced that its gaming GPUs would be optimized to run certain OpenAI models on personal computers.
The company’s robotics division, which management has highlighted as a future growth area, remains a small part of the business with $586 million in sales for the quarter, an annual growth of 69%.
Nvidia also announced that its board has approved an additional $60 billion in share repurchases with no expiration date. The company repurchased $9.7 billion of its stock during the quarter.