NVIDIA (NVDA) shares: strong balance sheet, but current price needs further free cash flow growth

Another strong quarter from NVIDIA confirms the company’s leadership, but its current market capitalisation requires maintaining free cash flow at a consistently high level.

NVIDIA Corporation (NASDAQ: NVDA) reported strong results for Q2 2026. Revenue stood at 46.7 billion USD (+6% q/q, +56% y/y), with Data Center revenue reaching 41.1 billion USD (+5% q/q, +56% y/y), adjusted gross margin of 72.7%, and adjusted earnings per share (EPS) of 1.05 USD (or 1.04 USD excluding the release of the H20 reserve of 180 million USD and related taxes). Growth linked to the Blackwell architecture remained robust: revenue from Blackwell-based data centre solutions increased by 17% q/q, while Gaming reached 4.3 billion USD and Professional Visualization totalled 601 million USD for the quarter.

The main constraint in the past quarter was China, as H20 deliveries to this market were absent and are not included in the forecast for the coming period due to uncertainty surrounding export licences.

For Q3 2026, the company expects revenue of around 54.0 billion USD (±2%), an adjusted gross margin of approximately 73.5% (±50 bps), adjusted operating expenses of around 4.2 billion USD, and an effective tax rate of roughly 16.5%.

This article examines NVIDIA Corporation, outlines its revenue sources, summarises quarterly performance, and provides expectations for the next quarter. It also includes a forecast for NVIDIA shares for the 2025 calendar year.

About NVIDIA Corporation

NVIDIA Corporation is a US tech company established in 1993 by Jensen Huang, Chris Malachowsky, and Curtis Priem. Jensen Huang has remained the company’s CEO since its foundation. NVIDIA specialises in producing GPUs, chips for AI, data centres, and autopilot systems. The company plays a key role in developing gaming, professional visualisation, and AI computing. NVIDIA also held a prominent place in the cryptocurrency mining industry as its graphics cards were widely used for mining Bitcoin, Ethereum, and other digital assets. The company went public on 22 January 1999 on the NASDAQ under the NVDA ticker symbol.

NVIDIA Corporation’s main revenue streams

NVIDIA is primarily known for its GPUs, but it has recently expanded into the AI segment, dominating the market with high-performance chips used for AI technology development. The company reports revenues from this segment under the Data Center section. NVIDIA’s business model focuses on several key areas:

• GPUs: this includes the Gaming and Professional Visualization segments. The company supplies the gaming industry with GPUs for gaming PCs, consoles, and other devices, ensuring high-performance gaming experiences. Professional Visualization includes GPU sales for professionals involved in 3D graphics, CAD, animation, video editing, and other tasks that require high computing power
• Data Center: this is one of NVIDIA’s fastest-growing segments. The company develops GPUs and other hardware solutions for data centres, which are used in AI infrastructure, deep learning technologies, cloud computing, and big data processing
• Automotive segment: NVIDIA is actively developing products for the automotive sector, including self-driving platforms and advanced driver-assistance systems (ADAS)
• OEM and Others: this category includes earnings from technology licensing, sales of other chips and solutions for OEM manufacturers, such as laptop and other electronic device producers

NVIDIA diversifies its operations, covering various segments from gaming to data centres and automotive components. The company publishes statistics on the Gaming, Data

Center, Professional Visualization, and Automotive segments in its quarterly reports, while other indicators are included in the Other Revenues section.

NVIDIA Corporation Q2 FY 2025 report

On 28 August 2024, NVIDIA released its earnings report for Q2 fiscal year 2025, which ended on 28 July 2024. Below are the key figures compared to the corresponding period of last year:

• Revenue: 30.04 billion USD (+122%)
• Net income: 16.95 billion USD (+152%)
• Earnings per share: 0.68 USD (+152%)
• Operating profit: 19.94 billion USD (+156%)
• Gross margin: 75.1% (+500 basis points)

Revenue by segment:

• Data Center: 26.27 billion USD (+154%)
• Gaming: 2.88 billion USD (+16%)
• Professional Visualization: 454 million USD (+20%)
• Automotive: 346 million USD (+37%)

In the first half of 2024, NVIDIA returned 15.40 billion USD to shareholders through share repurchases and dividends. As of the end of Q2 2024, the company had 7.50 billion USD remaining for stock buybacks. On 26 August 2024, the Board of Directors approved an additional 50.00 billion USD for share repurchases, with no expiration date.

Although the Q2 fiscal 2025 results surpassed analyst forecasts, NVIDIA shares fell immediately after the release. Investors were not particularly impressed by the revenue and profit growth, as financial indicators had surged from 200% to 700% in the previous quarter. Maintaining such rapid growth over the long term is clearly unrealistic, but investor expectations remain elevated.

A fundamental analysis of NVIDIA’s report showed that revenue increased across all segments. The Data Center segment, which focuses on AI technologies, remained the leader. The company’s operating margin chart below illustrates the extent to which AI has influenced NVIDIA’s performance.

OpenAI announced ChatGPT on 30 November 2022, and by Q1 2023, NVIDIA reported an increase in its operating margin. It then grew at a rapid pace, even surpassing the levels seen during the cryptocurrency mining boom. In fact, this suggests that the company has been raising product prices without a decline in demand, allowing it to generate more than 50 cents in profit for every dollar invested.

NVIDIA Corporation Q3 FY 2025 report

On 20 November 2024, NVIDIA released its earnings report for Q3 fiscal 2025, which ended on 27 October 2024. Below are the key figures compared with the corresponding period of last year:

• Revenue: 35.08 billion USD (+94%)
• Net income: 19.31 billion USD (+109%)
• Earnings per share: 0.78 USD (+111%)
• Operating profit: 21.86 billion USD (+110%)
• Gross margin: 74.6% (+60 basis points)

Revenue by segment:

• Data Center: 30.77 billion USD (+112%)
• Gaming: 3.27 billion USD (+15%)
• Professional Visualization: 486 million USD (+17%)
• Automotive: 449 million USD (+72%)

Jensen Huang commented on the report, saying that “The age of artificial intelligence is in full steam, driving a global shift to NVIDIA computing,” emphasising the strong demand for the Hopper and Blackwell microarchitecture products, which drove record results in the last quarter.

For Q4 fiscal 2025, NVIDIA forecast revenue of 37.50 billion USD (with a possible deviation of 2%) and a non-GAAP gross margin of 73.5%, reflecting confidence in further growth despite supply restraints, particularly due to the Blackwell production ramp-up.

NVIDIA Corporation Q4 FY 2025 report

On 26 February 2024, NVIDIA published its earnings report for Q4 fiscal 2025, which ended on 26 January 2025. Below are the key figures compared with the corresponding period of last year:

• Revenue: 39.33 billion USD (+78%)
• Net income: 22.09 billion USD (+80%)
• Earnings per share: 0.89 USD (+82%)
• Operating profit: 24.03 billion USD (+77%)
• Gross margin: 73.0% (+300 basis points)

Revenue by segment:

• Data Center: 35.58 billion USD (+93%)
• Gaming: 2.54 billion USD (-11%)
• Professional Visualization: 511 million USD (+10%)
• Automotive: 570 million USD (+103%)

Jensen Huang commented on the Q4 fiscal 2025 earnings report, saying that “artificial intelligence has been developing at an incredible pace, as agentic AI and physical AI are creating the basis for the next AI wave, which will revolutionise the largest industries”, underscoring the company’s key role in the AI boom, which led to record revenues of 39.30 billion USD. He highlighted the strong results of the Data Center segment, which reached 35.60 billion USD thanks to demand for the Hopper and Blackwell microarchitecture solutions.

For Q1 fiscal 2026, NVIDIA had projected revenue of 43.00 billion USD (with a possible variance of 2%) and a non-GAAP gross margin of 71.0%, indicating the company’s revenue remained robust. However, the decline in gross margin raised concerns among investors.

NVIDIA Corporation Q1 FY 2026 report

On 28 May 2025, NVIDIA released its report for Q1 fiscal 2026, which ended on 27 April 2025. Below are the key figures compared with the corresponding period last year:

• Revenue: 44.06 billion USD (+69%)
• Net income: 18.78 billion USD (+26%)
• Earnings per share: 0.76 USD (+27%)
• Operating profit: 21.63 billion USD (+28%)
• Gross margin: 60.5% (-1,790 basis points)

Revenue by segment:

• Data Center: 39.11 billion USD (+73%)
• Gaming: 3.76 billion USD (+42%)
• Professional Visualization: 509 million USD (+20%)
• Automotive: 567 million USD (+72%)

NVIDIA’s Q1 fiscal 2026 report reinforced the company’s leading position in the global AI race despite serious geopolitical and regulatory obstacles. It was a record-breaking quarter, with revenue reaching 44.06 billion USD, up 69% year-on-year. Growth was primarily driven by continued high demand for accelerated computing and AI infrastructure. The Data Center segment, which includes sales of high-performance GPUs to large cloud providers and corporate clients, generated 39.1 billion USD, up 73% from the previous year.

However, the quarter also saw serious challenges. One of the key negative factors was the US government’s restrictions on the export of advanced AI chips to China. Jensen Huang commented on this situation during a conference call, noting that despite persistent strong demand from China, the company was unable to meet it due to regulatory constraints. As a result, NVIDIA wrote off inventory worth 4.5 billion USD, primarily related to H20 chips intended for the Chinese market, and estimated lost revenue for the quarter at approximately 2.5 billion USD. For Q2 fiscal 2026, the company had projected a revenue loss of 8 billion USD due to the restrictions.

Huang also expressed concerns about the broader fallout from these trade restrictions, warning that the ban on advanced AI technology exports could have inadvertently accelerated the development of China’s domestic semiconductor industry, which might ultimately have undermined US global technological leadership. Huang also emphasised that revenue from China accounted for a smaller part of NVIDIA’s total sales at the time, with losses offset mainly by growing demand in North America, Europe, and newly emerging markets, including the Middle East.

For Q2 fiscal 2026, NVIDIA had expected revenue of approximately 45 billion USD. This forecast reflected the active rollout of the new Blackwell chip architecture, which, according to Huang, was already experiencing unprecedented demand from hyperscalers, government AI development programs, and major corporate clients. The company anticipated that strong demand for hardware solutions and AI software products would persist through the end of the fiscal year.

However, despite continued technological leadership and robust demand for AI solutions, NVIDIA faced signs of a slowdown in its key Data Center segment. Although revenue rose 73% year-on-year, the segment fell short of market expectations, which constrained the stock’s growth following the report’s release. This may have indicated the start of a normalisation phase after the rapid acceleration driven by the AI boom.

Nevertheless, the company continued to demonstrate exceptional financial performance and remained at the forefront of technological innovation. Losses related to export restrictions on China were severe, but they were offset mainly by global demand and the rollout of the next-generation Blackwell architecture. NVIDIA’s strategy to diversify its client base and actively expand into regions with rising AI initiatives forms a strong foundation for sustainable growth in fiscal 2026 and beyond.

NVIDIA Corporation Q2 2026 financial results

On 27 August 2025, NVIDIA released its Q2 2026 financial results for the quarter ended 27 July 2025. Key figures compared with the same period last year are as follows:

• Revenue: 46.74 billion USD (+56%)
• Net income: 26.42 billion USD (+59%)
• Earnings per share (non-GAAP): 1.05 USD (+56%)
• Operating profit: 30.16 billion USD (+30%)
• Gross margin: 72.7% (-300 bps)

Revenue by segment:

• Data centres: 41.09 billion USD (+56%)
• Gaming: 4.28 billion USD (+48%)
• Professional visualization: 601 million USD (+32%)
• Automotive: 586 million USD (+69%)
• OEM & other: 173 million USD (+97%)

NVIDIA reported strong results for Q2 2026. Revenue reached 46.7 billion USD (+6% q/q, +56% y/y). The main driver was the data centre segment, which posted 41.1 billion USD (+5% q/q, +56% y/y), with growth supported by Blackwell chip shipments (the Blackwell Data Center subsegment rose 17% sequentially). Gross margin was 72.4% GAAP and 72.7% non-GAAP. Adjusted earnings per share (non-GAAP EPS) came in at 1.05 USD, although this included a one-time positive effect from the release of a previously established 180 million USD reserve related to H20 chip deliveries to China. Excluding this one-off, EPS would have been 1.04 USD. Gaming revenue increased to 4.3 billion USD, Professional Visualization reached 601 million USD, and Automotive was 586 million USD.

The company noted that there were no H20 chip sales to China during the quarter, and forecasts for the next period also exclude these sales. The board approved an expansion of the share repurchase program by a further 60 billion USD. The dividend was set at 0.01 USD per share, with a record date of 11 September 2025 and a payment date of 2 October 2025.

The outlook for Q3 2026 anticipates revenue of approximately 54.0 billion USD (±2%), a non-GAAP gross margin of around 73.5% (±50 bps), non-GAAP operating expenses of roughly 4.2 billion USD, other income around 500 million USD, and an effective tax rate of roughly 16.5% (±1 pp). The company expects to finish the financial year with a non-GAAP margin of around 73.5%. It is important to note that this forecast does not include potential H20 chip sales to China. For investors, this means that management’s base case is built solely on current global demand and the acceleration of new Blackwell chip shipments, without assuming a recovery in the Chinese market.

Key growth drivers and risk analysis for NVIDIA Corporation

The main risks identified in the fundamental analysis of NVDA for Q2 2026 are the following:

• Regulatory risks related to China: in the past quarter, there were no H20 chip sales to China. The company acknowledges uncertainty surrounding export licences and explicitly states that US authorities expect 15% of revenue from licensed H20 sales, although the final rule has not yet been published. This creates a risk for volumes and margins if requirements are tightened. During the quarter, NVIDIA sold approximately 650 million USD of H20 chips outside China and released 180 million USD that had previously been reserved for the Chinese market, but these effects are one-off
• Concentration on hyperscale customers: large cloud providers accounted for around 50% of data centre revenue for the quarter. Any reduction or shift in their capital expenditure could materially impact NVIDIA’s growth trajectory
• Supply bottlenecks and technology cycle: Blackwell production relies on highly integrated packaging (CoWoS) at TSMC and HBM memory supplies. Any shortages or delays in these components will constrain shipments. Research indicates a high share of NVIDIA in TSMC’s CoWoS utilisation, while qualification of certain HBM3E modules by some vendors is delayed, which could shift B200/GB200 delivery schedules and reduce pricing flexibility
• Client power infrastructure: shortages of electricity and long connection times for new data centres can slow AI cluster deployment. Data centre developers are already considering temporary solutions (gas generators), highlighting infrastructure constraints
• Competition: the rollout of alternatives is accelerating (AMD MI350 series and successors, proprietary accelerators and TPUs by hyperscale clients). At comparable performance levels, this could pressure prices and upgrade cycles

The main growth drivers capable of supporting NVIDIA’s key financial metrics in the future include:

• Continued demand for generative AI infrastructure: investments in AI infrastructure remain a priority for the largest hyperscale providers (Meta, Microsoft, Amazon, Google, Oracle). NVIDIA currently retains a dominant position in server GPU supply, including H100, GH200, and platforms with NVLink/NVSwitch
• Expected contribution from new Blackwell and Grace Hopper 2 chips: in H2 2025, large-scale deliveries of the new generation of AI chips (Blackwell series) are expected, offering significant improvements in performance and energy efficiency compared with the current generation. This may trigger a new demand cycle and increase average selling prices
• Expansion in AI-enterprise and LLM inference: beyond the hyperscale segment, demand is growing from corporate clients implementing generative AI models in private environments (on-premises inference). This segment provides more stable and diversified revenue streams
• Comprehensive solutions and software: the company is developing the concept of rack-scale products (NVLink rack-scale), cloud services (DGX Cloud Lepton), efficient AI computing formats and tools (NVFP4), and software solutions and libraries (CUDA ecosystem, NIM, etc.). These initiatives enhance platform value and help sustain high margins
• Strategic growth in industrial and automotive solutions: NVIDIA continues to invest in autonomous vehicle platforms (NVIDIA Drive) and industrial automation. While these segments currently contribute minimally, they have substantial long-term scaling potential

Conclusion: NVIDIA demonstrates strong positions but remains under pressure from several risks, including uncertainty over exports to China, heavy dependence on hyperscale customers, vulnerability to supply chain and power infrastructure disruptions, and rising competition. At the same time, the company maintains a dominant position in AI infrastructure, prepares for the launch of the next-generation Blackwell chips, actively expands its software ecosystem, and diversifies beyond hyperscale. This combination suggests ongoing potential for further growth.

Fundamental analysis of NVIDIA Corporation

Below is a fundamental analysis of NVDA following Q2 2026 financial results:

• Liquidity and access to funding: at the end of Q2 2026 (quarter ended 27 July 2025), NVIDIA held 56.8 billion USD in cash, cash equivalents, and marketable securities – more than sufficient to cover operating needs and multi-year contractual obligations. Operating cash flow (OCF) for the quarter was 15.4 billion USD, and free cash flow (FCF = OCF – capital expenditure) amounted to 13.45 billion USD. Inventories increased to 15.0 billion USD to support the accelerated launch of Blackwell, while total procurement and production commitments stood at 45.8 billion USD (sequential growth). This reflects already booked capacity and confirmed customer orders, providing high visibility of future demand and reducing uncertainty regarding utilisation and revenue. The company has an active commercial paper program of 575 million USD, which was undrawn at the reporting date – short-term funding is available but unused. Overall, liquidity and strong cash generation enable the company to self-finance growth, and, if necessary, access capital markets quickly
• Debt and leverage: the balance sheet value of long-term debt is 8.47 billion USD. With 56.8 billion USD in cash and marketable securities, the net position is approximately 48.3 billion USD (i.e., cash significantly exceeds debt). The repayment schedule is balanced, with amounts due within 1–5 years of 3.75 billion USD, 5–10 years of 1.25 billion USD, and over 10 years of 3.5 billion USD. The interest burden is minimal: the company earns net interest income (interest income of 592 million USD for the quarter), further reducing sensitivity to rates.

Conclusion: debt risk for shareholders is low, and the balance sheet has a substantial margin of safety

• Cash flow and coverage of dividends, share buybacks, and funding for growth: quarterly OCF was 15.4 billion USD, capital expenditure was 1.89 billion USD, and FCF was 13.45 billion USD (FCF margin around 29% of revenue). During the quarter, 10.0 billion USD was returned to shareholders: 9.7 billion USD through buybacks and approximately 244 million USD in dividends. Free cash flow exceeds dividend payments by roughly 55 times, so the dividend of 0.01 USD per share (payment date 2 October 2025, record date 11 September) appears symbolic compared with the FCF generated. The share buyback was financed from current cash flows, representing about 72% of quarterly FCF. The board also increased the buyback program by 60 billion USD (in addition to the remaining 14.7 billion USD), providing flexibility in capital allocation without incurring debt. Given high margins, significant net cash, and multi-year procurement agreements, the company has sufficient resources to support large-scale investment while continuing to return capital to shareholders

Conclusion of NVDA fundamental analysis: the company has a strong balance sheet, characterised by high liquidity, positive net cash, low debt levels, and a favourable debt maturity profile. Current cash flows more than cover dividends and a significant portion of the buyback program, while leaving resources for the accelerated launch of Blackwell and further infrastructure expansion.

• Assessment of current NVIDIA share price: based on the fundamental analysis, the current price of 180 USD per share appears relatively high. It can only be justified by very rapid free cash flow growth over a 5–7-year horizon, which is a prolonged and demanding period. This explains why investors react strongly to any signs of slowing growth. Even with aggressive buyback programs and increased dividends, the 180 USD level remains a premium valuation, which requires sustainably high FCF growth. Given the current demand for Blackwell architecture and networking solutions, FCF growth above 30% per year seems achievable over the next 1–2 years. However, maintaining growth above 30% over five years will be extremely challenging, considering the cyclical nature of the semiconductor sector.

Conclusion: a price of around 180 USD per share may be considered justified and has potential for further growth only under a scenario where FCF growth exceeds 30% per year while maintaining high margins. Over the next two years, this scenario appears realistic, but any slowdown in growth would likely trigger a correction and intensified selling of NVIDIA shares.

Expert forecasts for NVIDIA Corporation

stock

• Barchart: 38 of 46 analysts rated NVIDIA shares as Strong Buy, 2 as Buy, 5 as Hold, and 1 as Strong Sell. The upper end of the forecast is 250 USD, the lower end 100 USD
• MarketBeat: 37 of 43 rated the shares as Buy, 5 as Hold, and 1 as Sell. The upper end of the forecast is 250 USD, the lower end is 120 USD
• TipRanks: 34 of 38 rated the shares as Buy, 3 as Hold, and 1 as Sell. The upper end of the forecast is 250 USD, the lower end is 145 USD
• Stock Analysis: 23 of 45 analysts rated NVIDIA as Strong Buy, 19 as Buy, 2 as Hold, and 1 as Strong Sell. The upper end of the forecast is 250 USD, and the lower end is 100 USD

NVIDIA Corporation stock price forecast for 2025

NVDA stock is trading within an ascending channel on the weekly timeframe and is approaching resistance at 143 USD. However, a Head and Shoulders pattern is forming on the chart, signalling a potential price decline. Based on NVIDIA’s stock performance, the possible movements in 2025 are as follows:

The primary forecast for NVIDIA stock suggests a decline to the support level at 75 USD, in line with the signal from the Head and Shoulders technical analysis pattern. If this scenario unfolds, the correction from current levels would be approximately 42% – a significant drop for a company at the forefront of AI development.

Investor interest in NVIDIA shares may rise markedly at the 75 USD level, potentially paving the way for a recovery in NVDA stock price and a return to the all-time high near 153 USD.

The optimistic forecast for NVIDIA stock anticipates a breakout above the 143 USD resistance level, which could drive the price higher towards the upper boundary of the channel at 180 USD.

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