Q2 2027 NVIDIA Corp Earnings Call Transcript
Key Points
- Record revenue of $96 billion, more than doubling year-over-year, with growth accelerating for the fourth consecutive quarter.
- Strong demand across all segments, including hyperscalers, AI labs, enterprises, and sovereign customers, with ACIE revenue growing 138% year-over-year.
- Expansion of partnership with AWS, deploying an additional 2 million GPUs and adopting NVIDIA's full physical AI stack for warehouse robots.
- Vera Rubin, the next-generation platform, is in production with purchase orders from all major customers, expected to be the fastest product ramp in NVIDIA's history.
- Networking business achieved record revenue, with Spectrum-X Ethernet growing 2.6 times year-over-year, positioning NVIDIA as a leading network company.
- New revenue-sharing model with NeoClouds creates recurring revenue streams, potentially driving billions in revenue over the medium to long term.
- Investments in Frontier AI labs and partnerships with infrastructure capital providers to raise over $500 billion, supporting long-term growth.
- Gross margin remains strong at 75%, with expectations to settle at 72-73% in fiscal 2028 despite memory cost pressures.
- Record shareholder returns of $26 billion in Q2, with a commitment to return excess free cash flow.
- Guidance for fiscal 2028 revenue growth of approximately 70%, driven by robust demand and supply chain expansion.
- Supply constraints limit growth to 70% for fiscal 2028, despite demand being significantly higher, potentially disappointing customers.
- Gross margins are expected to decline to 71-72% in Q4 due to extreme memory pricing conditions, with a reset in expectations.
- Memory scarcity is a significant challenge, with prices expected to rise further into next year, impacting profitability.
- China data center revenue is excluded from forward outlook due to geopolitical uncertainty, with Hopper shipments to China being dilutive to gross margins.
- Inventory increased to $32 billion, and days sales outstanding rose to 60 days, reflecting extended payment terms and potential cash flow impacts.
- Operating expenses are expected to grow in the low 50s for the full year, driven by portfolio broadening and AI tool usage.
- The company faces challenges in securing land, power, and shell capacity, which are critical for scaling AI infrastructure.
- Investments in Frontier AI labs and credit enhancements carry risks, with some labeling it as circular financing, though NVIDIA sees it differently.
- The company's growth is heavily dependent on the AI build-out, and any slowdown in AI adoption could impact future results.
- Despite strong demand, the company is unable to fully meet it, leading to potential lost revenue opportunities.
Good afternoon. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to NVIDIA's second quarter earnings call (Operator Instructions) Thank you. Toshiya Hari, you may begin your conference.
&
Thank you. Good afternoon, and welcome to NVIDIA's conference call for the second quarter of fiscal 2027. With me today from NVIDIA are Jensen Huang, President and Chief Executive Officer; and Colette Kress, Executive Vice President and Chief Financial Officer. Our call is being webcast live on NVIDIA's Investor Relations website. The webcast will be available for replay until the conference call to discuss our financial results for the third quarter of fiscal 2027. The content of today's call is NVIDIA's property. It can't be reproduced or transcribed without our prior written consent.
During this call, we may make forward-looking statements based on current expectations. These are subject to
| Access to All Earning Calls and Stock Analysis | |
| 30-Year Financial on one screen | |
| All-in-one Stock Screener with unlimited filters | |
| Customizable Stock Dashboard | |
| Real Time Insider Trading Transactions | |
| 8,000+ Institutional investors’ 13F holdings | |
| Powerful Excel Add-in and Google sheets Add-on | |
| All data downloadable | |
| Quick customer support | |
| And much more... |
Trustpilot
We'd love to learn more about your experiences on GuruFocus.com and how we can improve!
Take Survey
