Nvidia announced impressive second-quarter 2026 earnings, surpassing analyst estimates for both revenue and adjusted earnings per share. The company reported $46.74 billion in revenue against an estimated $46.06 billion, and adjusted earnings per share of $1.05 compared to the $1.01 estimate. Net income rose 59% year-over-year to $26.42 billion. Nvidia's overall revenue climbed 56% from $30.04 billion in the year-ago period, marking nine consecutive quarters of over 50% year-over-year growth, though this quarter's growth was the slowest during that streak. Looking ahead, Nvidia projected third-quarter revenue of $54 billion, plus or minus 2%, exceeding analyst expectations of $53.1 billion.
Despite the strong financial performance, Nvidia's stock experienced a 2-3% drop in extended trading after the announcement. This reaction was partly attributed to data center revenue, which, at $41.1 billion, rose 56% but slightly missed the StreetAccount estimate of $41.34 billion. Analysts suggested that the market, accustomed to Nvidia's "blow-the-doors-off" growth, perceived this as a slowdown, even with growth rates still exceeding 50%. Joseph Moore, an analyst at Morgan Stanley, noted that sentiment has largely caught up to the growth potential, implying that anything less than extraordinary growth might be seen as a disappointment.
A significant factor influencing investor sentiment was the absence of H20 chip sales to China during the quarter, which had been anticipated to contribute substantially to revenue. Nvidia had previously stated that the H20 chip, custom-built for China, could have added $8 billion in second-quarter sales if commercially available. The company did, however, benefit from the release of $180 million worth of H20 inventory to a non-China customer. While the guidance for the next quarter excludes H20 sales to China, CEO Jensen Huang indicated that $2 billion to $5 billion in H20 revenue could be shipped if geopolitical conditions allow. The data center division's sales were primarily driven by $33.8 billion in compute (GPU chips), a 1% sequential decline partly due to $4.0 billion less in H20 sales, and $7.3 billion from networking parts, nearly doubling year-over-year.
Market observers characterized the negative stock reaction as a "knee-jerk reaction," highlighting that a 50-55% growth rate for a company with a $50 billion quarterly revenue run rate remains remarkable. The stock had already gained more than a third in 2025, outperforming the S&P 500 Index. Some analysts also pointed to the strong gross margin guidance of 73.5% as a positive indicator of profitability resilience. Despite the short-term volatility, Nvidia continues to be viewed as a benchmark investment in artificial intelligence, with strong underlying demand for its products, including older Hopper architecture chips, indicating unmet market needs.
