Nvidia's Q2 fiscal 2026 quarterly report was not just a formality, but a true turning point for the market. The release of results on August 26 not only dispelled investor concerns but also triggered a powerful rebound in stock prices. The company's shares, which initially dropped to $205 in after-hours trading, reversed course within just a few minutes and surged 4.51%, reaching $219.12. This is a signal that the "earnings curse" that had plagued the stock for the past four quarters has finally been broken.
Key metrics came in significantly better than forecasts. Revenue for the reporting period totaled $96.2 billion, exceeding the analyst consensus estimate of $92.2 billion by $4 billion. Adjusted earnings per share (EPS) reached $2.22 versus the expected $2.10. Year-over-year revenue growth was an impressive 106%, while adjusted net income jumped 118% to $54 billion. Free cash flow was recorded at $21.3 billion.
Data centers remain the main driver
The primary contributor to this success was the Data Center segment, whose revenue reached $89 billion, surpassing the forecast of $85.8 billion and showing 117% year-over-year growth. Particularly telling is that sales to "hyperscalers"—the largest cloud providers—amounted to $48.71 billion against the expected $43.55 billion. This directly refutes the thesis about demand concentration among a narrow circle of clients and removes some of the risks associated with the "AI bubble."
Gross margin remained at 75%, matching forecasts. However, the company has already warned that this metric could decline to 74% in the current quarter—likely due to costs associated with launching new products.
Q3 guidance: above all expectations
The main surprise for investors came in the guidance for the October quarter. Nvidia expects revenue of $108 billion (plus or minus 2%), significantly above the analyst consensus ($104.2 billion) and even the upper end of traders' informal expectations of $107–110 billion. Notably, this guidance does not include sales of computing solutions to China, which opens up potential for additional growth.
The backlog of mandatory purchases surged from $119 billion to $279 billion, primarily driven by memory supply contracts. This confirms that demand for AI infrastructure is not just persisting but accelerating. Additionally, the company confirmed the transition of the Vera Rubin platform—the successor to the Blackwell architecture—to full-scale production. Server racks are already operational at partners' sites.
CEO Jensen Huang emphasized in a statement: "AI has reached a tipping point. It's already delivering value. AI tokens are generating profit. Now computing is generating revenue." These words sound like a manifesto for a new era, and the market appears ready to believe it.
My comment: The fact that shares rose 4% after the release rather than falling, as in the previous four quarters, is a critical psychological signal. The market is tired of the "earnings trap" and is now shifting focus to fundamental metrics. The question is whether Nvidia can sustain this momentum until regular trading opens on Thursday—management's comments on memory costs and the pace of Rubin's rollout will be key drivers. Given that Nvidia and Micron account for a third of all S&P 500 earnings growth, the fate of the entire market now depends on these two companies.