NVIDIA Corporation

Income statement: notes and sources

FY2022 total operating expenses exclude the $1,353 million Arm acquisition termination cost recorded in FY2023; FY2023 total operating expenses of $11,132 million include it. EBITDA is an analyst computation (operating income plus D&A) and is not a NVIDIA-reported measure.

Margin profile (%)

Revenue CAGR. FY2021 ($16,675 million) to FY2026 ($215,890 million): five-year CAGR of 66.9%. FY2022 to FY2026 (four years): 68.3%. Net income CAGR FY2022–FY2026: 87.4%.

Balance sheet

Post-FY2026 balance-sheet transformation (as of 26 July 2026): total assets $320,272 million; shareholders' equity $228,984 million; cash and equivalents $22,443 million; marketable debt securities $34,143 million; marketable equity securities $42,783 million; non-marketable securities $51,157 million (including $47,898 million of privately held equity and $3.3 billion of equity-method investments in infrastructure financiers); accounts receivable $63,059 million; inventories $31,575 million (raw materials $11,341 million — a 3.0x increase in six months, consistent with the Rubin ramp and memory pre-buying); total debt $33,366 million following the June 2026 issuance; total liabilities $91,288 million.

Cash flow: notes and sources

FY2026 dividends and buybacks are derived from the disclosed $41.1 billion of total FY2026 capital returned and the $0.01 quarterly dividend on approximately 24.4 billion shares.

H1 FY2027 (six months to 26 July 2026): operating cash flow $74,421 million; capex $4,434 million; free cash flow $69,895 million; buybacks $39,044 million; dividends $6,290 million; $24,896 million of net debt proceeds; $2,944 million paid to Groq, Inc. under the licence agreement (classified in financing activities); purchases of equity securities $42,404 million.

Ratio analysis: notes and sources

ROIC computed as operating income after the effective tax rate divided by total debt plus ending equity. Net debt is negative (net cash) in every year, so net debt/EBITDA is shown as a negative multiple. Interest coverage uses reported interest expense.

Commentary on trends, inflections and drivers

FY2022 — the crypto-inflated peak of the old NVIDIA. Revenue of $26.9 billion was still 46% Gaming. Gross margin of 64.9% was a graphics-company margin. The Arm acquisition was in flight and would fail.

FY2023 — the trough. Revenue was flat but the composition and profitability collapsed. Gaming fell 27% as crypto demand evaporated and channel inventory had to be cleared; gross margin fell 800 basis points to 56.9%; the $1,353 million Arm termination charge and $2.2 billion of inventory provisions crushed operating income to $4.2 billion. This is the single most important year for understanding NVIDIA's downside: operating income fell 58% on flat revenue. The operating leverage that works so violently upward works equally violently downward.

FY2024 — the AlexNet moment monetised. Data Center revenue tripled to $47.5 billion on H100. Gross margin recovered to 72.7% on mix. Operating income rose 7.8x. Free cash flow of $27.0 billion exceeded the prior three years combined.

FY2025 — scale. Revenue more than doubled again to $130.5 billion; gross margin peaked at 75.0%; net income of $72.9 billion made NVIDIA the most profitable semiconductor company in history by a wide margin. Buybacks stepped up to $33.7 billion.

FY2026 — growth with two visible costs. Revenue rose 65% to $215.9 billion, but gross margin fell 390 basis points to 71.1%. Two drivers, both disclosed: (i) the business-model transition from selling Hopper HGX boards to selling full-scale Blackwell data-centre solutions, which lowers percentage margin while raising absolute dollars per deployment; (ii) the $4.5 billion H20 charge in Q1 FY2026 following the April 2025 export licensing requirement, part of $7.2 billion of total FY2026 inventory and excess-purchase-obligation provisions (versus $3.7 billion in FY2025), a net 2.6% unfavourable margin impact. Margin recovered sharply through the year, reaching 75.0% in Q4. Operating expenses rose 41%, driven by a 29% increase in compensation and benefits and a 79% increase in compute and infrastructure spend — NVIDIA is now one of the largest internal consumers of its own product. Goodwill rose from $5.2 billion to $20.8 billion and non-marketable securities from $3.4 billion to $22.3 billion, reflecting the Groq transaction and the start of the equity-investment programme.

FY2027 to date — acceleration and a new margin problem. H1 FY2027 revenue of $177.8 billion already exceeds all of FY2026 by 82%. Gross margin has held at 75.0%. But management guided Q3 FY2027 gross margin down to 74.0% and told investors margin will trough at 71–72% in Q4 FY2027 before settling at 72–73% in FY2028, attributing this explicitly to extreme memory pricing driven by the AI build-out itself. This is the first NVIDIA-specific manifestation of a genuinely reflexive risk: the company's own demand creation is inflating its input costs. Offsetting it, "other income, net" of $24.1 billion in H1 FY2027 — of which $23.7 billion is gains on equity securities — now contributes materially to earnings and introduces mark-to-market volatility that did not previously exist in the P&L. Note the divergence in Q2 FY2027: GAAP EPS of $2.46 versus non-GAAP EPS of $2.22, the gap being investment gains.

Working capital is the pressure point. In H1 FY2027 accounts receivable consumed $24.6 billion of cash and inventories $10.2 billion. Receivables at $63.1 billion are 65% of a single quarter's revenue. The 10-Q discloses that NVIDIA has extended payment terms of "90 days up to one year" to investment-grade customers "to assist customers with large data center builds." Combined with $2.8 billion of customer advances on the other side, this is a company beginning to use its balance sheet as a sales tool.

Management guidance

Consensus for FY2027 is approximately $396 billion of revenue. Zacks consensus implies FY2027 EPS growth of approximately 69.2% and FY2028 of approximately 34.3%.

Bull case

1. The FY2028 guide is a floor, not a forecast. Huang stated plainly that "our demand is much greater than 70%; our supply allows us to confidently deliver 70%." A company that has beaten its own guidance fourteen consecutive quarters has just issued a supply-constrained number. Every incremental unit of HBM or CoWoS capacity that comes online converts directly into revenue above the guide. Kress's projection of $1.3 trillion of FY2028 hyperscaler capex against a $2 trillion cloud backlog frames the demand envelope.

2. The demand base has genuinely broadened. ACIE grew 138% year on year in Q2 FY2027 to $40.3 billion, faster than Hyperscale at 101%, and now represents 45% of Data Center revenue. AI clouds, sovereign programmes, industrial and enterprise deployments are structurally different buyers with different funding sources and different cyclicality. The Japan national AI infrastructure programme, the Korean gigawatt build with SK Telecom and NAVER, and 35 European supercomputers are politically funded and price-insensitive. The concentration risk that has defined the bear case for three years is measurably, if slowly, improving.

3. NVIDIA has bought the answer to its own biggest threat. ASIC substitution in inference was the most credible structural bear argument. NVIDIA paid $20 billion for Groq's LPU architecture and compiler, shipped Groq 3 LPX in full production within eight months, and integrated it into Vera Rubin racks through Dynamo for a claimed 35x throughput per megawatt. It then paid $12.9 billion for the distribution layer of the open-model ecosystem. Neither move was defensive positioning; both are shipping product. At 19.1x forward earnings, the market is not paying for either.

Bear case

1. The financing structure has turned a hardware company into a credit story. NVIDIA has invested nearly $50 billion in frontier labs, guaranteed up to $105 billion of lease and power obligations for an OpenAI affiliate, carries $108.5 billion of maximum gross guarantee exposure, and is mobilising over $500 billion of third-party capital toward entities whose principal use of that capital is buying NVIDIA product. The Q2 FY2027 10-Q added indebtedness as a standalone risk factor for the first time. Credit markets have already reacted: five-year CDS doubled from approximately 40 bp to 82 bp on guarantee reports alone. If AI monetisation disappoints, NVIDIA does not merely lose revenue — it absorbs losses on equity positions, honours residual-value guarantees, and writes down $31.6 billion of inventory built against $279 billion of non-cancellable supply commitments. The FY2023 analogue was a $1.35 billion Arm charge and $2.2 billion of provisions; the FY2029 analogue would be an order of magnitude larger.

2. Margin compression is already guided, and the cause is structural. Gross margin will fall from 75.0% to 71–72% by Q4 FY2027 on memory pricing. The memory shortage is not cyclical noise; it is the direct consequence of an industry-wide AI build-out that NVIDIA created and is contractually committed to accelerating (a reported $267 billion of memory spend through 2029). Applying 72.5% to $690 billion of FY2028 revenue instead of 75% costs roughly $17 billion of gross profit. Consensus EPS growth of 34.3% for FY2028 against 70% revenue growth already reflects this — the market has priced the margin problem, which means the upside from the revenue guide is smaller than it looks.

3. The customer base is the competitor base, and it is executing. Every one of NVIDIA's five largest customers is shipping alternative silicon at frontier scale: Anthropic on up to one million Google TPUs, Microsoft on Maia for GPT-5.2-class workloads, AWS on Trainium, Meta on MTIA and up to 6 GW of AMD Instinct, OpenAI on 6 GW of AMD. Broadcom's $73 billion AI backlog and its stated path to over $100 billion of 2027 AI revenue is, in substance, a forward order book for chips NVIDIA will not sell. ASICs are on track for 27.8% of accelerator server shipments in 2026. NVIDIA's revenue share has already fallen from approximately 87% in 2024 to 75–81% in 2026. Share loss has been invisible because the market tripled; it will not stay invisible if the market stops tripling.

Catalysts and monitorables — next 12 months

Analyst verdict

NVIDIA at $5.55 trillion is not, on the numbers, an expensive stock. Nineteen times forward earnings for a business guiding to 70% revenue growth, generating 75% gross margins and $96.6 billion of annual free cash flow, is a multiple the market normally assigns to companies growing at a fifth of that rate. The market's scepticism is not about demand — Q2 FY2027 revenue doubled year on year and management issued a supply-constrained forecast because it could not honestly issue a demand-based one. The scepticism is about what NVIDIA has had to become to sustain that growth.

Over eighteen months NVIDIA has transformed from a fabless designer with a fortress balance sheet into something closer to a vertically integrated infrastructure conglomerate with an investment portfolio, a guarantee book and $366 billion of forward commitments. It now underwrites the leases, backstops the power, takes the equity, arranges the third-party capital and books the revenue. Kress's pre-emptive defence — "some will call this circular financing; we see it differently" — is the tell that management knows this is the debate.

Both things can be true. The AI build-out is real, agentic workloads are generating revenue for customers, and no competitor has assembled a comparable stack. Equally, NVIDIA has converted a business with essentially no downside beta into one with substantial second-order exposure to its customers' economics, and it has done so while guiding its own gross margin down 400 basis points on input costs it helped inflate.

The position is best understood as a high-quality operating business wrapped around an increasingly leveraged bet on the AI capital cycle. The operating business justifies the multiple. The wrapper is what will determine whether the multiple holds. Watch the guarantee disclosures and the receivables line more closely than the revenue beat.

Prepared from publicly available information as of 6 September 2026. Figures marked as derived, approximate or unconfirmed should be verified against primary filings before use in any model or transaction. Where sources conflict — notably FY2026 Data Center revenue ($193.7 billion per the Q4 FY2026 press release versus $197.3 billion in some secondary coverage), the Groq consideration ($20.0 billion versus $20.6 billion), the Hugging Face price ($12.93 billion confirmed versus $14 billion reported by Bloomberg prior to confirmation), and geographic revenue under the billing-location versus headquarters-location methodologies — both figures and the basis of the discrepancy are noted in the relevant section. Not investment advice.