Analyst(s): Ray Wang, Daniel Newman
Publication Date: August 28, 2025
NVIDIA’s latest results highlight strong momentum in data center and networking, driven by rapid adoption of the Blackwell platform. Growth across gaming, professional visualization, and automotive reinforces NVIDIA’s leadership in accelerated computing.
What is Covered in this Article:
- NVIDIA’s Q2 FY 2026 financial results
- Record networking revenue driven by Spectrum-X and NVLink adoption
- Blackwell platform ramp and AI factory expansion momentum
- Growth across gaming, professional visualization, and automotive
- Geopolitical constraints and outlook for Q3 FY 2026
The News: NVIDIA (NASDAQ: NVDA) reported Q2 FY 2026 revenue of $46.7 billion, up 6% sequentially and 56% YoY, broadly in line with consensus estimates of $46.2 billion. Data Center revenue was $41.1 billion, up 56% YoY, though slightly below the $41.3 billion consensus. Networking revenue surged 98% YoY to $7.3 billion, exceeding estimates of $5.1 billion, while Gaming revenue rose 49% YoY to $4.3 billion, versus expectations of $3.8 billion. Professional Visualization revenue grew 32% YoY to $601 million, ahead of the $532 million consensus, and Automotive revenue increased 69% YoY to $586 million, marginally below the $593 million estimate.
Non-GAAP gross margin was 72.7%, compared to 75.7% in Q2 FY 2025, with operating income of $30.2 billion (+51% YoY).
“Blackwell is the AI platform the world has been waiting for, delivering an exceptional generational leap — production of Blackwell Ultra is ramping at full speed, and demand is extraordinary,” said Jensen Huang, founder and CEO of NVIDIA. “NVIDIA NVLink rack-scale computing is revolutionary, arriving just in time as reasoning AI models drive orders-of-magnitude increases in training and inference performance. The AI race is on, and Blackwell is the platform at its center.”
NVIDIA Q2 FY 2026 Earnings: Networking Steals the Spotlight and Q3 Ramp Will Be Key To Watch
Analyst Take: NVIDIA’s Q2 FY 2026 results underscored its dominant position in AI infrastructure, supported by strong demand for Blackwell systems and record networking revenue. While top-line growth remained impressive, the market reaction highlighted concerns about decelerating growth momentum. Still, NVIDIA continues to show strategic depth through product launches, ecosystem expansion, and accelerated adoption across industries, positioning itself at the center of the AI buildout.
Based on our modelling, supply chain research, and management’s comments, we continue to take an optimistic stance on NVIDIA’s coming quarter’s performance, given strong AI demand and the company’s systematic advantage over its competitors. In addition, we think Q3 could serve a potential upside for the company, driven by factors such as further acceleration of GB200, ramp-up of GB300, and continued growth of the overall data center business, consisting of compute and networking. While uncertainty in China is likely to persist, we view it as an optional upside—beneficial if realized, but not critical to the overall thesis. According to management, China presents a potential 2 billion to 5 billion opportunity in Q3 if the chips are allowed to be shipped.
Blackwell Adoption Drives AI Factory Momentum
The Blackwell platform was the standout driver of performance, with Blackwell Data Center revenue growing 17% sequentially and contributing tens of billions in quarterly sales. NVIDIA confirmed the production ramp of GB300 racks, now shipping at approximately 1,000 racks per week, with further acceleration expected in Q3. It will be key to watch how this translates into NVIDIA’s Q3 performance.
The GB200 NVL72 system is already in large-scale deployment by model builders such as OpenAI, Meta, Mistral, as well as leading U.S. hyperscalers such as Microsoft, AWS, Meta, and Google, delivering 10x efficiency improvements in token-per-watt versus Hopper. NVIDIA also introduced NVFP4 precision, enabling 7x faster training than FP8 while preserving 16-bit accuracy, cementing Blackwell’s status as the new AI inference benchmark. With major cloud providers and enterprises embracing the architecture, Blackwell is set to anchor NVIDIA’s growth trajectory into FY 2027.
Networking Surges as Scale-Out Demand Escalates
Networking was a record bright spot, with revenue almost doubling YoY to $7.3 billion, driven by strong adoption of Spectrum-X Ethernet, InfiniBand XDR, and NVLink scale-up systems. Spectrum-X surpassed a $10 billion annualized run rate, and NVIDIA unveiled Spectrum-XGS, designed to interconnect multiple giga-scale AI factories. InfiniBand revenue nearly doubled sequentially, reflecting its role in low-latency networking for leading model makers. NVLink, now in its fifth generation, provides 14x the bandwidth of PCIe Gen 5, a critical enabler of rack-scale Blackwell systems. With networking efficiency gains directly translating to significant customer savings, this business is becoming a critical margin driver and reinforces NVIDIA’s positioning as a full-stack AI infrastructure vendor.
As we noted in our “preview” earlier this week on the importance of networking, it emerged as the most impressive growth driver this quarter. As of today, we still believe this segment remains underappreciated and underestimated by many. We expect investors’ awareness of the importance of networking, including scale-up, scale-out, and scale across, as well as the comparative advantage it provides to NVIDIA’s overall edge over its competitors and attractiveness to customers.
Expansion Across Sovereign AI and Robotics
Beyond hyperscale adoption, NVIDIA is capturing sovereign and industrial AI opportunities. In Europe, the company is supporting national initiatives such as the Isambard-AI supercomputer in the UK and EU plans to establish 20 AI factories, targeting over $20 billion in Sovereign AI revenue this year. On robotics, the Jetson Thor platform launched this quarter with 10x the AI performance of Orin, attracting adoption from Amazon Robotics, Boston Dynamics, Caterpillar, and Meta. NVIDIA’s Cosmos world foundation models and Omniverse-based digital twin solutions further extend its reach into industrial automation. These initiatives highlight how NVIDIA is diversifying its growth vectors beyond CSPs into enterprise, sovereign, and physical AI use cases, deepening its long-term growth runway.
Managing Geopolitical Constraints and China Exposure
While growth was broad-based, geopolitical challenges continue to weigh on visibility. NVIDIA recorded no H20 shipments to China in Q2 FY 2026, a $4 billion sequential drag, though it did ship $650 million to an unrestricted customer outside China. Management stated that $2–5 billion of H20 sales could materialize in Q3 FY 2026 if licenses are granted, but guidance excludes such contributions. CEO Jensen Huang emphasized the importance of bringing Blackwell to China, framing the market as a $50 billion opportunity growing at 50% annually, which we think is a very reasonable assessment. In our latest Quarterly Data Center Semiconductor Market Model, we also foresee the Asia-Pacific region, led by China, as the second biggest market in the world, following North America.
Looking ahead, we recognize the uncertainty surrounding NVIDIA’s China business—whether through existing H20 offerings or potential downgraded Blackwell products in the future. Both scenarios ultimately depend on not one but two governments for NVIDIA to compete effectively and address the vast computing market. The ability to address the Chinese market will determine additional upside for NVIDIA in the coming quarters and its long-term competitiveness in the region.
“The China market, I’ve estimated to be about $50 billion of opportunity for us this year if we were able to address it with competitive products. And if it’s $50 billion this year, you would expect it to grow, say, 50% per year, as the rest of the world’s AI market is growing as well. It is the second-largest computing market in the world, and it is also the home of AI researchers. About 50% of the world’s AI researchers are in China. The vast majority of the leading open source models are created in China. And so it’s fairly important, I think, for the American technology companies to be able to address that market,” said NVIDIA CEO Jensen Huang.
Guidance and Final Thoughts
For Q3, NVIDIA guided revenue of $52.9–55.1 billion, in line with consensus, with gross margins of 73–74%. While this outlook implies continued strength, it also reflects a moderation from the breakneck pace of the last two years, which contributed to the stock’s pullback post-earnings. Management reiterated its view that AI infrastructure spending will reach $3–4 trillion by the end of the decade, supported by reasoning AI, enterprise adoption, sovereign AI, and robotics. Rubin, NVIDIA’s next-generation platform with six new chips already in fab, is on track for release next year, maintaining its annual cadence of innovation.
Despite near-term geopolitical and growth-rate concerns, we reaffirmed our view that NVIDIA’s unmatched full-stack architecture, record networking gains, and accelerating adoption of Blackwell position it as the cornerstone of global AI infrastructure investment.
As we move toward Q3, we believe there are a few things investors and industry players should pay close attention to: 1) Further shipment acceleration and yield improvement of GB300; 2) Ramp-up shipment of GB300; 3) The Company’s networking acceleration. 4) Next-gen Rubin’s development and customer preferences. 5) Overall compute demand and investment sentiment.
Of course, Futurum’s Semiconductors, Supply Chain, & Emerging Tech Practice will keep you all posted on these developments.
See the complete press release on NVIDIA’s Investor Relations website.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
Other insights from Futurum:
Is NVIDIA’s Jetson Thor the New Brain for General Robotics?
Is NVIDIA’s RTX PRO 6000 Blackwell the Tipping Point for Enterprise AI Acceleration?
NVIDIA Q1 FY 2026 Revenue Jumps 69% Despite China Export Setback
Author Information
Ray Wang is the Research Director for Semiconductors, Supply Chain, and Emerging Technology at Futurum. His coverage focuses on the global semiconductor industry and frontier technologies. He also advises clients on global compute distribution, deployment, and supply chain. In addition to his main coverage and expertise, Wang also specializes in global technology policy, supply chain dynamics, and U.S.-China relations.
He has been quoted or interviewed regularly by leading media outlets across the globe, including CNBC, CNN, MarketWatch, Nikkei Asia, South China Morning Post, Business Insider, Science, Al Jazeera, Fast Company, and TaiwanPlus.
Prior to joining Futurum, Wang worked as an independent semiconductor and technology analyst, advising technology firms and institutional investors on industry development, regulations, and geopolitics. He also held positions at leading consulting firms and think tanks in Washington, D.C., including DGA–Albright Stonebridge Group, the Center for Strategic and International Studies (CSIS), and the Carnegie Endowment for International Peace.
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
