Nvidia delivered another big quarter and a $60B buyback, but the stock fell because the beat wasn’t explosive where it mattered most (data center), growth is normalizing, and the outlook still excludes China.

NVIDIA’s stock fell 4% after hours following the report’s release. Going into the report, options showed traders had priced in a swing of roughly 6%, or about $260 billion, in Nvidia shares after results were posted.

The results (Q2 FY26)

  • Revenue: $46.74B vs $46.23B est. (+56% YoY)
  • Adj. EPS: $1.05 vs $1.01 est. (+54% YoY)
  • Adj. gross margin: 72.7% (ahead of est.)
  • Data Center: $41.1B vs ~$41.2–$41.3B est. (+56% YoY) — slight miss
  • Gaming: $4.3B (+49% YoY)
  • Pro Viz: $601M (+32% YoY); Auto: $586M (slight miss), +69% YoY
  • Adj. OpEx: $3.80B (better than est.) | EBIT: $28.44B (a touch light)
  • Free cash flow: mid-$20Bs
  • Capital return: Buyback authorization +$60B; $24.3B returned in 1H

Why did $NVDA drop even though it beat?

The numbers were good, but not good enough in the places that matter most, and the stock was priced for fireworks.

  1. The bar was higher than “estimates.”
    Street consensus was $46.2B / $1.01, but many traders were leaning to whisper numbers above that. A small beat on the headline won’t lift a $4T stock when people expected a big beat.
  2. Slight miss in the key line (Data Center).
    Data Center is the engine. It printed $41.1B vs ~$41.2–$41.3B expected — basically a hair light. When the core segment isn’t the source of upside, bulls take profits.
  3. Growth is normalizing.
    YoY is still huge (Revenue +56%, EPS +54%), but last year you had triple-digit growth. The market is adjusting from “shock & awe” to “very strong but slowing,” which pressures the multiple.
  4. Guidance is good, not jaw-dropping.
    Q3 rev $54B (±2%) is above the Street (~$52.5B) and margins guided to ~73.5%, but some hoped for an even bigger “Blackwell surge.” Good ≠ multiple expansion when expectations are extreme.
  5. China is still a ‘later’ story.
    Management said the Q3 outlook assumes no H20 shipments to China. That keeps a chunk of potential demand out of the base case. Investors want timing and scale, not just promise.
  6. Nitpicks in the details.
    EBIT $28.44B was a touch below models; FCF sits mid-$20Bs. Small things, but enough to justify “sell the news” after a big run.
  7. Positioning/flow (IV crush).
    Options priced a ~6.1% move. After earnings, implied vol falls, dealers unwind hedges, call buyers take profits — flows that can push shares down even on a beat.
  8. Valuation reality.
    At ~8% of the S&P 500 and a $4T+ cap, “priced for perfection” means anything short of spectacular can trade lower on the day.
Nvidias Q2 earnings results

What to watch next

  1. Can they hit the Q3 guide? – Revenue $54B ±2% and adj. GM ~73.5%. If they deliver or raise, the stock gets support; if not, multiple compresses.
  2. Blackwell ramp details: Shipments, lead times, yields, and which customers get priority. If Blackwell ramps smoothly (and quickly), it can flip sentiment back to bullish.
  3. Data Center momentum vs. supply: Is the slight miss a timing/supply issue or demand issue? Watch backlog, delivery cadence, and any comment about ODM rack builds.
  4. China path & mix: Status of export licenses, any H20 or China-specific Blackwell timing, and how the 15% China fee affects margins. When China moves from “optionality” to “in the guide,” that’s upside.
  5. Hyperscaler capex signals: Fresh commentary from MSFT/AMZN/GOOGL/META on AI spend. If capex stays hot into 2H/2026, demand support remains.
  6. Margin bridge: How they get from 72.7% → ~73.5%: pricing, mix (compute vs networking), software attach, and any China drag.
  7. Networking + systems: Infiniband/Ethernet growth and full-rack deliveries. Bottlenecks here can cap revenue conversion even if demand is strong.
  8. Software & recurring (NIM, CUDA stack, enterprise AI): Any traction here lifts quality of revenue and margin durability.
  9. Cash returns vs. investment: Pace of the $60B buyback, share-count trend, and whether capex/supply commitments expand alongside it.
  10. Competition watch: Any signs of price pressure or share shifts vs. rivals’ next-gen accelerators. If competitors catch up, investors will look harder at NVDA’s pricing power.

Guidance (Q3 FY26)

  • Revenue: $54.0B ±2% (above Street; ~+15% QoQ)
  • Adj. gross margin: ~73.5% (±50 bps)
  • Adj. OpEx: ~$4.2B
  • Important: Guidance assumes no H20 shipments to China.
Nvidias Q3 guidance

“Blackwell is the AI platform the world has been waiting for, delivering an exceptional generational leap — production of Blackwell Ultra is ramping at full speed, and demand is extraordinary,” said Jensen Huang, founder and CEO of NVIDIA. “NVIDIA NVLink rack-scale computing is revolutionary, arriving just in time as reasoning AI models drive orders-of-magnitude increases in training and inference performance. The AI race is on, and Blackwell is the platform at its center.”

During the first half of fiscal 2026, NVIDIA returned $24.3 billion to shareholders in the form of shares repurchased and cash dividends. As of the end of the second quarter, the company had $14.7 billion remaining under its share repurchase authorisation. On August 26, 2025, the Board of Directors approved an additional $60.0 billion to the Company’s share repurchase authorisation, without expiration.

NVIDIA will pay its next quarterly cash dividend of $0.01 per share on October 2, 2025, to all shareholders of record on September 11, 2025.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

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