On August 26, 2026, NVIDIA reported second-quarter fiscal 2027 revenue of $96.2 billion, up 106% from a year ago and 18% from the prior quarter, with Data Center alone contributing $89.0 billion. Net income was $59.7 billion. Yet cash from operations was $24.1 billion — down 52% from the $50.3 billion NVIDIA generated just one quarter earlier, on higher revenue and higher profit. In the same ninety days, the company issued $25.0 billion of senior notes, returned $26.0 billion to shareholders, bought $15.8 billion of equity securities, and disclosed a guarantee package capped at $105 billion for a single data-center campus. The income statement says NVIDIA sells chips. The rest of the filing says it is increasingly the balance sheet behind its own customers.
The Headline Numbers
| Metric | Q2 FY2027 | Q2 FY2026 | YoY | Q1 FY2027 | QoQ |
|---|---|---|---|---|---|
| Revenue | $96,221M | $46,743M | +106% | $81,615M | +18% |
| Gross profit | $72,142M | $33,853M | +113% | $61,157M | +18% |
| Operating income | $63,734M | $28,440M | +124% | $53,536M | +19% |
| Net income | $59,688M | $26,422M | +126% | $58,321M | +2% |
| Diluted EPS | $2.46 | $1.08 | +128% | $2.39 | +3% |
| Operating cash flow | $24,077M | $15,365M | +57% | $50,344M | −52% |
| Free cash flow | $21,341M | $13,450M | +59% | $48,554M | −56% |
Two things stand out. First, net income grew only 2% sequentially on 18% revenue growth — because Q1 carried $15.9 billion of equity-portfolio gains and Q2 carried $7.8 billion, so the comparison is flattered by a line that has nothing to do with chips (a theme we flagged last quarter). Operating income, the cleaner number, grew 19% sequentially and 124% year over year, and that is the figure to anchor on. Second, operating cash flow fell by more than half quarter over quarter even as revenue and operating income rose. Every dollar of that gap has an address on the cash flow statement, and we will walk through it below.
Revenue Deep Dive: Two Platforms, Two Kinds of Customer
NVIDIA now reports two market platforms, and this quarter it also split Data Center into two customer classes: Hyperscale, and "AI Clouds, Industrial & Enterprise" (ACIE). During the quarter, one customer was reclassified from ACIE to Hyperscale after a change in its business model, with prior periods recast.
| Platform | Q2 FY2027 | % of Revenue | YoY | QoQ |
|---|---|---|---|---|
| Data Center | $89,023M | 92.5% | +117% | +18% |
| — Hyperscale | $48,710M | 50.6% | +102% | +13% |
| — AI Clouds, Industrial & Enterprise | $40,313M | 41.9% | +138% | +25% |
| Edge Computing | $7,198M | 7.5% | +27% | +13% |
| Total | $96,221M | 100% | +106% | +18% |
The mix shift inside Data Center is the most important number in the release. Hyperscalers — the handful of cloud giants that drove the first two years of this cycle — still buy the most, but they grew 13% sequentially. ACIE grew 25%. AI-native labs, enterprises, sovereign programs, and the specialist "neoclouds" that rent capacity to all of them are now 45% of Data Center revenue and growing twice as fast as the hyperscalers. Management attributes the Data Center increase to the Blackwell Ultra ramp, and notes that Hopper shipments to China were under 1% of Data Center revenue — the China export story is now effectively a rounding error in the base.
That diversification is genuinely bullish for demand durability. It is also exactly the customer class the CFO commentary describes as "growing faster than their balance sheets and long-term credit profiles can support" — which is why NVIDIA is now stepping in to help them secure land, power, and data-center shells. Hold that thought.
Edge Computing (the former Gaming, Pro Visualization, Automotive, and OEM lines) grew 27% to $7.2 billion, driven by Blackwell workstations and partly offset by weaker consumer PC sales that management ties to elevated memory and system prices. At 7.5% of revenue, it is a footnote to the investment case, though a healthy one.
The Margin Story
| Metric | Q2 FY2026 | Q3 FY2026 | Q4 FY2026 | Q1 FY2027 | Q2 FY2027 |
|---|---|---|---|---|---|
| Gross margin | 72.4% | 73.4% | 75.0% | 74.9% | 75.0% |
| Operating margin | 60.8% | 63.2% | 65.0% | 65.6% | 66.2% |
| Net margin | 56.5% | 56.0% | 63.1% | 71.4% | 62.0% |
Gross margin is holding at 75.0% with Blackwell as "the vast majority" of revenue, and the year-over-year improvement of 2.6 points is mix — Blackwell Ultra replacing Hopper. Guidance for Q3 is 74.0%, a deliberate step down as Vera Rubin begins shipping — new architectures always start at lower yields.
Operating margin at 66.2% is another series high, and the mechanism is simple: operating expenses rose 10% sequentially ($8.4 billion, driven by compute infrastructure and compensation) while revenue rose 18%. Net margin is the noisy line. The swing from 71.4% to 62.0% is not deterioration in the business; it is the equity-gains line shrinking from $15.9 billion to $7.8 billion. Non-GAAP net income, which strips those gains out, actually grew 18% sequentially to $54.0 billion — the same rate as revenue.
The One Big Question: Where Did $35 Billion of Profit Go?
Net income was $59.7 billion. Operating cash flow was $24.1 billion. The reconciliation between them, straight from the condensed cash flow statement, is the most informative table in the filing:
| Cash flow bridge (Q2 FY2027) | Amount |
|---|---|
| Net income | $59,688M |
| Gains from equity securities (non-cash) | −$7,771M |
| Stock-based compensation, D&A, other non-cash | +$2,867M |
| Increase in accounts receivable | −$22,346M |
| Increase in inventories | −$5,784M |
| Increase in prepaid expenses and other assets | −$5,497M |
| Payables and accrued liabilities, net | +$2,920M |
| Net cash provided by operating activities | $24,077M |
Three items explain almost the entire gap. $7.8 billion of net income was a paper gain on the investment portfolio — real under GAAP, not collectible as cash. $5.8 billion went into inventory ahead of the Vera Rubin launch, which is ordinary pre-ramp behavior. And $22.3 billion went into accounts receivable. Receivables rose from $40.7 billion to $63.1 billion in one quarter; days sales outstanding jumped from 45 to 60. Management's explanation: "extended payment terms on large, multi-quarter agreements with certain investment-grade customers."
That sentence deserves a slow read. NVIDIA recognized $96.2 billion of revenue and collected roughly $74 billion of it. The remainder is owed by customers who negotiated longer to pay — investment-grade ones, per the company, but the trend line is unambiguous: receivables were $10.0 billion at the end of FY2024, $23.1 billion at the end of FY2025, $38.5 billion at the end of FY2026, and $63.1 billion now. Annualized revenue has grown roughly 6× over that span, and receivables have kept pace — then this quarter they jumped 55% while revenue rose 18%. NVIDIA is extending more credit, for longer, to a customer base that is itself increasingly financed.
Then look at the other side of the cash flow statement. With $24.1 billion coming in from operations, NVIDIA spent $19.7 billion on buybacks, $6.0 billion on dividends (the first full quarter at the new $0.25 rate, up from $0.01), $15.8 billion buying equity securities, $21.8 billion buying debt securities, $2.7 billion on capex, and made a $2.9 billion financing payment labeled "Groq, Inc." on the statement. The arithmetic only closes because of one line: $24.9 billion of proceeds from issuing debt. Long-term debt went from $7.5 billion to $32.4 billion. A company with $56.6 billion in cash and marketable debt securities borrowed $25 billion — "for general corporate purposes" — in the same quarter it returned $26 billion to shareholders and put $15.8 billion into other companies' equity.
And the commitments that don't yet appear on the balance sheet grew faster than anything that does:
| Off-balance-sheet exposure (as of July 26, 2026) | Amount |
|---|---|
| Supply and capacity commitments (primarily memory) | $279B (from $119B last quarter) |
| Cloud service agreements, leases, equity investments, capex | $87B |
| Total commitments | $366B |
| AI-cloud agreements and third-party data-center leases | $56B |
| Guarantees for AI-cloud partners' data-center leases | $3.5B |
| SB Energy PORTS-Pike campus guarantees (signed August 2026) | up to $105B |
The PORTS-Pike arrangement is the clearest statement of the new model: NVIDIA provides credit support for the land, power, and shell of a 4.25-gigawatt Ohio campus that will host NVIDIA infrastructure under 20-year leases to OpenAI. The guarantees phase in from fiscal 2029 as facilities become ready, decline as the tenant pays its rent, and — per management — each generation of hardware deployed there could represent $150–200 billion of NVIDIA revenue. Separately, the company announced compute-financing platforms with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR intended to mobilize over $500 billion of third-party capital. NVIDIA is no longer just selling the picks and shovels. It is co-signing the mine.
Tracking a $96.2B Quarter in Plain Text
Every figure above ties to a real posting in a public Beancount ledger — a plain-text, double-entry format in which every debit needs a matching credit, so a quarter either reconciles to the filing or visibly fails to. In this ledger, Income postings are negative (credits) and Expense postings are positive (debits):
; Check: -96,221 + 24,079 + 7,054 + 1,354 - 7,773 + 11,819 = -59,688 (net income) ✓
2026-07-26 * "Q2 FY2027 Revenue" "Data Center"
Assets:Current:Accounts-Receivable 89,023,000,000.00 USD
Income:Data-Center -89,023,000,000.00 USD
2026-07-26 * "Q2 FY2027 Revenue" "Edge Computing"
Assets:Current:Accounts-Receivable 7,198,000,000.00 USD
Income:Edge-Computing -7,198,000,000.00 USD
2026-07-26 * "Q2 FY2027 Expenses" "Cost of revenue"
Expenses:Cost-Of-Revenue 24,079,000,000.00 USD
Assets:Current:Cash-And-Equivalents -24,079,000,000.00 USD
2026-07-26 * "Q2 FY2027 Income" "Other income, net (includes $7,771M net gains from equity securities)"
Assets:Current:Cash-And-Equivalents 7,773,000,000.00 USD
Income:Other-Income-Expense -7,773,000,000.00 USDOne modeling note: the condensed income statement in this release collapses interest income, interest expense, and equity gains into a single "Other income, net" line, where earlier quarters broke them out. The ledger follows the filing rather than guessing — one posting, annotated with the $7,771 million of equity gains disclosed in the non-GAAP reconciliation — and the split will be refined when the 10-Q lands. That is the discipline the format enforces: you record what the source says, and you say so.
The most telling transaction in the file this quarter isn't about chips at all:
2026-07-26 * "Q2 FY2027" "Senior unsecured notes issuance, net of costs"
Assets:Current:Cash-And-Equivalents 24,896,000,000.00 USD
Liabilities:NonCurrent:Long-Term-Debt -24,896,000,000.00 USD
2026-07-27 balance Assets:Current:Accounts-Receivable 63,059,000,000.00 USD
2026-07-27 balance Liabilities:NonCurrent:Long-Term-Debt -32,366,000,000.00 USD
2026-07-27 balance Assets:NonCurrent:Other 66,903,000,000.00 USDThose three balance assertions are the quarter. Receivables of $63.1 billion, a debt balance that more than quadrupled, and $66.9 billion of non-current "other" assets — of which $51.2 billion is non-marketable securities, up from $22.3 billion at fiscal year-end: stakes in private AI labs, infrastructure financiers, and partners. Add the $42.8 billion of marketable equity securities in current assets and NVIDIA is carrying roughly $94 billion of equity positions in other companies, many of them its own customers. Every one of these numbers is asserted against the filed balance sheet, so total assets ($320.3 billion) and total liabilities ($91.3 billion) tie out to the dollar.
The Multi-Year Arc
| Fiscal Year | Revenue | Gross Margin | Net Income | Accounts Receivable (period-end) |
|---|---|---|---|---|
| FY2024 | $60,922M | 72.7% | $29,760M | $9,999M |
| FY2025 | $130,497M | 75.0% | $72,880M | $23,065M |
| FY2026 | $215,938M | 71.1% | $120,067M | $38,466M |
| H1 FY2027 (six months) | $177,837M | 75.0% | $118,010M | $63,059M |
Six months into fiscal 2027, NVIDIA has already earned within about $2 billion of what it earned in all of fiscal 2026, and its first-half revenue exceeds fiscal 2025's full year by more than a third. Q3 guidance of $108.0 billion (±2%), assuming zero Data Center compute revenue from China, implies a run rate above $430 billion. The receivables column is the arc's shadow: it has compounded at least as fast as revenue every year, and this quarter it inflected upward. The company that once sold GPUs to buyers with cash in hand now sells racks to buyers on terms, with NVIDIA's own balance sheet — and its guarantees — behind the deals.
The Verdict: Bull vs. Bear
Bull Case
- Q3 guidance of $108.0 billion implies another 12% sequential step on a $96 billion base, with China compute contributing nothing to the forecast — every upside there is pure option value.
- ACIE revenue grew 138% year over year and 25% sequentially; demand is no longer a handful of hyperscalers, and the buyer base widening is the single best argument against a sudden capex air-pocket.
- Gross margin held at 75.0% through a full Blackwell Ultra ramp, and Q3's 74.0% guide is the Vera Rubin transition, not competitive pressure.
- Operating margin reached 66.2% with opex growing at roughly half the rate of revenue — the leverage is structural, not a mix artifact.
- $99 billion remains under the buyback authorization after a record $26 billion quarter of returns, and NVIDIA's net cash position ($56.6 billion of cash and marketable debt against $33.4 billion of debt) is still comfortably positive.
Bear Case
- Operating cash flow of $24.1 billion against $59.7 billion of net income is a 40% conversion rate; receivables rose $22.3 billion in a quarter and DSO went from 45 to 60 days on "extended payment terms."
- $7.8 billion of net income — and $23.7 billion of first-half net income — is mark-to-market gains on an equity portfolio now worth roughly $94 billion, concentrated in the very customers whose demand drives the revenue line.
- NVIDIA borrowed $25 billion in a quarter it returned $26 billion to shareholders; long-term debt went from $7.5 billion to $32.4 billion, and the buyback is now, on the margin, debt-financed.
- Commitments more than tripled to $366 billion (mostly memory) and guarantee exposure reached $108.5 billion, $105 billion of it tied to one campus and one tenant — none of it on the balance sheet yet.
- Edge Computing, the only non-AI business left in the reporting, is growing 27% while consumer PC demand is being "tempered by elevated memory and system prices" — a cost NVIDIA's own $279 billion of memory commitments will help keep high.
Our Take: The operating business is as extraordinary as the headline, and the ACIE mix shift makes the demand story more durable, not less. But this is the quarter the analysis has to move from the income statement to the cash flow statement and the commitments footnote. NVIDIA is now extending credit to customers through receivables, funding them through equity stakes, and guaranteeing their landlords through off-balance-sheet commitments — while borrowing to keep buybacks whole. That is a different risk profile from selling chips for cash, and it will not show up in gross margin. Watch DSO, watch cash conversion, and watch how much of the $108.5 billion of guarantees becomes effective. The revenue is real. The question is who, ultimately, is paying for it.
