Nvidia tops Q2 expectations on revenue of $96.2 billion, offers strong Q3 outlook

Nvidia ( NVDA ) reported its Q2 earnings on Wednesday, beating Wall Street's expectations on the top and bottom lines and providing a better-than-expected outlook for the third quarter.

For Q2, Nvidia saw adjusted earnings per share (EPS) of $2.22 on revenue of $96.2 billion, which is better than the EPS of $2.09 and revenue of $92.3 billion that Wall Street was anticipating.

The company also says it is projecting Q3 revenue of between $105.8 billion and $110.1 billion. Wall Street was calling for $1.51 billion.

Nvidia stock rose more than 4% after initially falling immediately following the announcement.

"AI has reached its inflection point. It's doing useful work. Its tokens are productive and profitable. Now, compute is revenue," Nvidia CEO Jensen Huang said in a statement.

"And demand is accelerating. This time last year, one lab alone was driving the build-out; today, we have a golden age of new AI labs and startups, multiple frontier labs scaling in parallel, a thriving open-model ecosystem, and physical AI coming online — with strong momentum across the U.S. and around the world. The AI infrastructure build-out is at full steam. Vera Rubin, now in full production, was built to power exactly this moment."

Nvidia's Data Center revenue, which includes Hyperscalers and AI Clouds, Industrial, and Enterprise (ACIE), came in at $89 billion versus a projected $85.8 billion.

Nvidia CFO Colette Kress said in her quarterly commentary that Hyperscale revenue more than doubled in Q2 and that ACIE revenue increased 138%.

Edge Computing, which includes Nvidia's other businesses, such as physical AI and gaming, brought in $7.2 billion. Analysts were expecting $6.6 billion.

Nvidia's report comes as chip stocks have struggled over the past three months amid fresh fears about whether companies will see returns on their vast AI investments.

Microsoft ( MSFT ), Amazon ( AMZN ), and Google ( GOOG , GOOGL ) helped allay at least some of those fears, thanks to strong growth numbers in their respective cloud businesses, though Google, along with Meta ( META ), spooked investors on increased spending.

Nvidia continues to derive the majority of its revenue from hyperscalers such as Amazon, Google, and Microsoft. But each of those companies either builds its own chips to reduce its dependence on Nvidia or sells them to third-party customers, creating a potential headwind for the company in the future.

Nvidia also continues to ink deals with companies across the AI ecosystem.

Earlier this month, the AI leader announced it is working with BlackRock, Blackstone, KKR, Apollo, Brookfield, and Goldman Sachs to establish a $500 billion pool of capital in a move that would securitize Nvidia's GPUs. (Disclosure: Yahoo is a portfolio company of funds managed by affiliates of Apollo Global Management.)