Quarterly Results of NVIDIA: Will the AI Giant Surprise the Market Again?

Today, after the market closes, Nvidia (NVDA.US) will release its financial results. After dynamic gains in recent months, the company’s shares remain close to their historical highs, although they have experienced a slight correction in recent weeks. Nvidia is currently near record-high valuation levels, making the Q2 results a key factor that could determine the further direction of the stock price. At such elevated valuations, the company is particularly susceptible to increased volatility. The options market prices the potential price movement after the earnings release at around 8.5%. Options market analysis suggests a possible change in Nvidia’s market value of approximately $260 billion in reaction to the earnings announcement.

Source: xStation5

Outlook for Q2 2026

Analysts forecast that Nvidia’s revenue for Q2 2026 will reach approximately $46.23 billion, indicating continued strong growth compared to previous periods. The Data Center segment, a key growth driver, is expected to generate around $41.25 billion in revenue, supporting significant expansion in data center and AI solutions. Gaming, while smaller in terms of revenue, remains an important segment with a forecast of about $3.82 billion.

Net income is estimated at around $24.92 billion, reflecting sustained very high profitability with a net margin of 54%. Adjusted earnings per share (EPS) are projected at approximately $1.01.

The expected increase in profitability is also evident in the operating margin, expected to be around 63.5%, highlighting efficient cost management and the high value-added offered by the company. Research and development expenses, crucial for the company’s continued innovation, are estimated at about $4.44 billion, representing nearly 10% of revenue.

Free cash flow is expected to amount to approximately $23.8 billion, indicating strong cash generation and financial stability, enabling further investments and growth.

Nvidia continues to benefit from a strong market position thanks to growing demand for AI-related technologies and expanding data center and graphics segments. Investors will closely watch not only the financial results but also forecasts regarding chip production, demand dynamics for new GPU models, and the impact of external factors such as material availability constraints.

Nvidia’s Estimated Financial and Operational Data for Q2 2026

Revenues:

• Total revenue: $46.23 billion

• Data Center revenue: ~$41.25 billion

  • Compute: ~$34.1 billion

  • Networking: ~$5.1 billion

• Gaming: ~$3.82 billion

• Professional Visualization: ~$0.53 billion

• Automotive: ~$0.59 billion

• OEM & Other: ~$0.11 billion

Profitability:

• Adjusted operating income (EBIT): ~$29.36 billion

• EBITDA: ~$29.58 billion

• Operating margin (EBIT margin): 63.5%

• Adjusted net income: ~$24.92 billion

• Net margin: 54%

Earnings per Share (EPS):

• Adjusted diluted EPS: $1.01

• GAAP diluted EPS: ~$0.95

Costs and Expenses:

• R&D expenses: ~$4.44 billion (~9.6% of revenue)

• Total operating expenses: ~$4.02 billion

• Selling, general, and administrative expenses: ~$0.75 billion

Cash Flow:

• Free cash flow: ~$23.8 billion

• Capital expenditures (CapEx): ~$1.12 billion

Financial Ratios:

• Gross margin: ~72.1%

• Return on assets (ROA): ~37.9%

• Return on equity (ROE): ~97.4%

Export Restrictions and Their Impact

Nvidia recorded a significant $5.5 billion inventory write-down of chips intended for the Chinese market, clearly illustrating the scale of issues caused by U.S. export restrictions. In the first fiscal quarter of 2026, the company lost about $700 million in revenue due to the ban on shipping H20 chips, and the total impact of restrictions in subsequent quarters was expected to be significantly higher.

The recent approval by U.S. authorities to export processors to China, although subject to a 15% revenue tax, opens new prospects for Nvidia in this strategically important market. China remains one of the largest and fastest-growing technology markets in the world, with huge demand for AI solutions and server infrastructure. The ability to resume chip exports allows Nvidia to compete to maintain a strong position against growing local competitors and leverage increasing investments by Chinese companies and institutions in AI development.

Nvidia vs. AMD Competition

The rivalry between Nvidia and AMD is a key element in the landscape of graphics processors and AI solutions. Both companies consistently develop their technologies, seeking to gain the largest share in the growing AI and data center segments. Nvidia, thanks to its advanced Blackwell architecture and strong GPU ecosystem, maintains a performance edge and a software development environment important for corporate clients.

Meanwhile, AMD is heavily investing in developing its graphics processors and chips, offering competitive pricing and increasing compatibility with AI platforms. The company is aggressively expanding its presence in Asian markets, including China, posing additional challenges to Nvidia given export restrictions and pricing pressure.

This competition drives innovation and accelerates AI technology development but also increases margin pressure, requiring both companies to constantly balance quality, price, and speed of new product rollouts.

Valuation

Nvidia remains a highly valued company, with a forward P/E ratio currently around 45.6x. This indicates investors expect continued dynamic growth in revenues and earnings, but such a valuation also means the company faces the challenge of meeting these ambitious expectations.

Analyzing historical forward P/E levels shows that the current valuation is near the upper bounds seen in recent years, suggesting the market prices Nvidia close to previous cycle highs. Such a valuation leaves little margin for potential earnings disappointments or negative market signals, which could trigger a sharp correction in the stock price.

Nvidia’s high valuation is based on its key position in the graphics processor and AI solutions segment, technological advantage, and growing demand for advanced chips for data centers and AI. However, investors should monitor risks related to regulatory pressure, export restrictions, and increasing competition from AMD and other players.