Nvidia’s record earnings come with margin and financing risks

Nvidia’s record earnings come with margin and financing risks

Revenue surged 106% to $96.2 billion, but supplier commitments, accounts receivable and lower free cash flow raised concerns.

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By Editorial Team
Edited by Estefano Gomez

Nvidia’s second-quarter results showed continued strength in artificial-intelligence demand, but supplier commitments, accounts receivable and free cash flow raised concerns about the company’s outlook.

Revenue reached $96.2 billion in fiscal 2027’s second quarter, up 106% from a year earlier. Net income rose 126% to $59.69 billion, while the data-center business generated $89 billion in revenue, a 117% increase.

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Nvidia guided for about $108 billion in revenue in the third quarter, with demand for its chips constrained by supply. The company projects roughly 70% revenue growth for fiscal 2028, above the 45% consensus estimate before the results.

Gross margin was 75% and Nvidia expects it to decline to about 74% in the third quarter. Rising memory costs are contributing to the pressure.

The company has committed up to $105 billion in guarantees tied to an OpenAI data-center lease in Ohio and is participating in a $500 billion AI infrastructure financing consortium. Executives rejected descriptions of those commitments as circular financing.

Quarterly cash flow was $21.3 billion, down sharply from prior quarters. Nvidia also remains dependent on a small group of hyperscalers, some of which are developing proprietary chips to reduce their reliance on the company.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
TECHNOLOGY
Nvidia’s record earnings come with margin and financing risks
Nvidia’s record earnings come with margin and financing risks

Revenue surged 106% to $96.2 billion, but supplier commitments, accounts receivable and lower free cash flow raised concerns.

By Editorial Team
Edited by Estefano Gomez

Share

Add us on Google

Nvidia’s second-quarter results showed continued strength in artificial-intelligence demand, but supplier commitments, accounts receivable and free cash flow raised concerns about the company’s outlook.

Revenue reached $96.2 billion in fiscal 2027’s second quarter, up 106% from a year earlier. Net income rose 126% to $59.69 billion, while the data-center business generated $89 billion in revenue, a 117% increase.

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Nvidia guided for about $108 billion in revenue in the third quarter, with demand for its chips constrained by supply. The company projects roughly 70% revenue growth for fiscal 2028, above the 45% consensus estimate before the results.

Gross margin was 75% and Nvidia expects it to decline to about 74% in the third quarter. Rising memory costs are contributing to the pressure.

The company has committed up to $105 billion in guarantees tied to an OpenAI data-center lease in Ohio and is participating in a $500 billion AI infrastructure financing consortium. Executives rejected descriptions of those commitments as circular financing.

Quarterly cash flow was $21.3 billion, down sharply from prior quarters. Nvidia also remains dependent on a small group of hyperscalers, some of which are developing proprietary chips to reduce their reliance on the company.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.