NVIDIA Corporation (NVDA) Q2 2026 Earnings Call Transcript

GB300 production shipments: Began production shipments of GB300 in Q2, with full production underway and a run rate of approximately 1,000 racks per week.

Blackwell Ultra platform: Generated tens of billions in revenue, with seamless transition to GB300 architecture.

RTX PRO servers: In full production, adopted by nearly 90 companies for various applications, poised to become a multibillion-dollar product line.

Jetson Thor robotics platform: Now available, delivering greater AI performance and energy efficiency, adopted by leading enterprises.

Thor SoC for automotive: Began shipments, coinciding with the industry's shift to higher autonomy and generative AI.

AI infrastructure market: Projected $3-4 trillion in AI infrastructure spend by the end of the decade, with $600 billion in data center investments this year.

Sovereign AI initiatives: Significant investments in Europe and the UK, including EUR 20 billion for AI factories and the Isambard-AI supercomputer.

Gaming market: Record $4.3 billion revenue, driven by Blackwell GeForce GPUs and GeForce NOW upgrades.

Networking revenue: Achieved record $7.3 billion, driven by demand for Spectrum-X Ethernet, InfiniBand, and NVLink.

Hopper and Blackwell GPUs: Focused on meeting global demand, with significant growth in shipments.

RTX platform for AI applications: Partnered with OpenAI to optimize GPT models for RTX-enabled devices.

China market challenges: Geopolitical issues affecting H20 shipments, with potential $2-5 billion revenue if resolved.

Share repurchase program: Returned $10 billion to shareholders in Q2, with a new $60 billion authorization approved.

Expansion in robotics and AI: Partnership with Siemens for AI factories and adoption of Omniverse platform by European robotics companies.

Geopolitical Issues: The U.S. government is reviewing licenses for sales of H20 to China customers, creating uncertainty. A select number of licenses have been approved, but no shipments have been made. The U.S. government has expressed an expectation for 15% revenue from licensed H20 sales, but no regulation has been codified. This has led to the exclusion of H20 revenue from Q3 outlook, potentially impacting $2 billion to $5 billion in revenue.

Supply Chain and Production Challenges: The transition to the GB300 rack-based architecture has been seamless, but production capacity is still ramping up. Current production is at 1,000 racks per week, with plans to accelerate further. Any delays in capacity expansion could impact market availability and revenue.

Regulatory and Compliance Risks: The U.S. government’s stance on approving Blackwell for China remains uncertain. This could limit NVIDIA's ability to compete globally and impact its revenue from the Chinese market.

Economic and Market Risks: The company is navigating a dynamic external environment, including economic uncertainties and competitive pressures. These factors could impact demand for NVIDIA's products and services.

Operational Costs: GAAP operating expenses rose 8% sequentially, driven by higher compute and infrastructure costs as well as higher compensation and benefit costs. This could impact profitability if not managed effectively.

Inventory Management: Inventory increased from $11 billion to $15 billion in Q2 to support the ramp of Blackwell and Blackwell Ultra. Excess inventory could pose financial risks if demand does not meet expectations.

Revenue Outlook: Total revenue for Q3 is expected to be $54 billion, plus or minus 2%, representing over $7 billion in sequential growth. This outlook does not include any H20 shipments to China customers.

Gross Margins: GAAP and non-GAAP gross margins are expected to be 73.3% and 73.5%, respectively, plus or minus 50 basis points. Non-GAAP gross margins are expected to remain in the mid-70s by year-end.

Operating Expenses: GAAP and non-GAAP operating expenses are expected to be approximately $5.9 billion and $4.2 billion, respectively. Full-year operating expenses are projected to grow in the high 30% range year-over-year, up from prior expectations of mid-30%.

Capital Expenditures: Investments are being accelerated to address significant growth opportunities, with a focus on ramping up production and innovation.

AI Infrastructure Market: Annual AI infrastructure investments are expected to grow, driven by reasoning agentic AI, sovereign AI, enterprise AI adoption, and robotics. The market for AI inference is expanding rapidly.

Product Launches and Adoption: The GB300 platform is in full production, with a current run rate of 1,000 racks per week, expected to accelerate further in Q3. Rubin platform remains on schedule for volume production next year. Blackwell GPUs are setting new benchmarks for AI inference performance.

Geopolitical Impact: H20 shipments to China are excluded from the Q3 outlook due to ongoing geopolitical issues. If resolved, potential revenue from H20 shipments could range from $2 billion to $5 billion in Q3.

Sovereign AI Revenue: Sovereign AI revenue is projected to exceed $20 billion this year, more than doubling from last year, driven by investments in AI factories across Europe and the U.K.

Networking Growth: Networking revenue is growing significantly, with Spectrum-X Ethernet and InfiniBand technologies driving adoption. Spectrum-XGS Ethernet is projected to double GPU-to-GPU communication speed.

Robotics and Automotive: The Jetson Thor robotics platform is now available, delivering significant AI performance improvements. Automotive revenue is up 69% year-on-year, driven by self-driving solutions and the launch of the NVIDIA Thor SoC.

Cash Dividends: In Q2, NVIDIA returned $10 billion to shareholders through share repurchases and cash dividends.

Share Repurchase Authorization: The Board of Directors approved a $60 billion share repurchase authorization, adding to the remaining $14.7 billion of authorization at the end of Q2.