Why Is Nvidia (NVDA) Down 1.4% Since Last Earnings Report?

A month has gone by since the last earnings report for Nvidia (NVDA). Shares have lost about 1.4% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Nvidia due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.NVIDIA Q2 Earnings Beat Expectations, Revenues Increase Y/YNVIDIA reported better-than-expected second-quarter fiscal 2026 results. Second-quarter non-GAAP earnings of $1.05 per share surpassed the Zacks Consensus Estimate by 5%. The reported figure soared 54% year over year and 30% sequentially, mainly driven by higher revenues and lower operating expenses.NVIDIA’s fiscal second-quarter revenues climbed 56% year over year and 6% sequentially to $46.74 billion. The top line beat the consensus mark by 1.3%. Robust growth across all end markets drove NVDA’s second-quarter revenues to a record level.NVIDIA’s Segmental DetailsNVIDIA reports revenues under two segments — Graphics and Compute & Networking.The Graphics segment includes GeForce GPUs for gaming and personal computers, the GeForce NOW game-streaming service and related infrastructure. The segment also offers solutions for gaming platforms, Quadro GPUs for enterprise design, GRID software for cloud-based visual and virtual computing, as well as automotive platforms for infotainment systems.Graphics accounted for 11.6% of fiscal second-quarter revenues. The segment’s top line gained 51% year over year and 21% sequentially to $5.41 billion. The Zacks Consensus Estimate for fiscal second-quarter revenues in the Graphics segment was pegged at $4.75 billion.Compute & Networking represented 88.4% of fiscal second-quarter revenues. The segment comprises the Data Center platforms and systems for artificial intelligence, high-performance computing and accelerated computing.Compute & Networking revenues soared 56% year over year and 4% sequentially to $41.33 billion. The consensus mark for this segment’s second-quarter revenues stood at $40.49 billion.Top-Line Details of NVIDIA’s Market PlatformBased on the market platform, revenues from Data Center (87.9% of revenues) jumped 56% year over year and 5% from the previous quarter to $41.1 billion. This robust rise was mainly driven by higher shipments of the Blackwell GPU computing platforms that are used for the training and inference of large language models, recommendation engines and generative AI applications. The Zacks Consensus Estimate for this end market’s fiscal second-quarter revenues was pegged at $41.11 billion. NVIDIA witnessed strong demand for its chips used in the Data Center as Microsoft, OpenAI and Google experienced exponential token generation growth.Gaming revenues increased 49% year over year and 14% sequentially to $4.29 billion, accounting for 9.2% of the total revenues. The year-over-year jump reflects strong demand from gamers, creators and AI enthusiasts. Increased supply of Blackwell products also aided the segment’s sales growth during the reported quarter. The Zacks Consensus Estimate for the Gaming end market’s second-quarter revenues was pegged at $3.83 billion.Professional Visualization revenues (1.3% of revenues) increased 32% year over year and 18% sequentially to $601 million, driven by the acceleration of Blackwell sales in Notebook products. The consensus mark for the Professional Visualization end market’s fiscal second-quarter revenues was pegged at $524.8 million.Automotive sales (1.3% of revenues) in the reported quarter totaled $586 million, up 69% on a year-over-year basis and 3% sequentially. The increase was mainly driven by the strong adoption of self-driving platforms. The Zacks Consensus Estimate for the Automotive end market’s fiscal second-quarter revenues was pegged at $573.4 million.OEM and Other revenues (0.3% of revenues) were up 56% year over year and 6% sequentially to $173 million. The consensus mark for the OEM end markets’ fiscal second-quarter revenues stood at $110.6 million.NVDA’s Operating DetailsNVIDIA’s non-GAAP gross margin of 72.7% reflects a decline of 3 percentage points year over year as Blackwell revenues consist primarily of full-scale datacenter systems compared to Hopper HGX systems last year. Sequentially, the non-GAAP gross margin improved 11.7 percentage points as the previous quarter included a $4.5 billion charge associated with H20 excess inventory and purchase obligations.Non-GAAP operating expenses increased 36% year over year and 6% sequentially to $3.8 billion. The rise was primarily driven by higher compensation and benefits expenses due to employee growth and compensation increases. However, as a percentage of total revenues, non-GAAP operating expenses declined to 8.1% from 9.3% in the year-ago quarter while remaining flat sequentially.The non-GAAP operating income jumped 51% year over year and 30% sequentially to $30.17 billion. The non-GAAP operating margin of 64.5% declined 190 basis points year over year but improved 1170 basis points from the previous quarter. NVIDIA’s non-GAAP net income margin of 55.2% for the first quarter contracted 120 basis points year over year but rose 1000 basis points from the previous quarter.NVIDIA’s Balance Sheet and Cash FlowAs of July 27, 2025, NVDA’s cash, cash equivalents and marketable securities were $56.79 billion, up from $53.7 billion as of April 27, 2025. As of July 27, the total long-term debt was $8.46 billion, which remained unchanged sequentially.NVIDIA generated $15.37 billion in operating cash flow during the second quarter and $42.78 billion in the first half of fiscal 2026. NVIDIA generated free cash flow of $13.45 billion in the second quarter and $39.58 billion in the first half of fiscal 2026.In the fiscal second quarter, the company returned $244 million to its shareholders through dividend payouts and repurchased stocks worth $9.72 billion. In the first half of fiscal 2026, NVIDIA paid $488 million in dividends and bought back shares worth $23.82 billion.On Aug. 26, 2025, NVIDIA’s board of directors approved a new $60 billion share repurchase authorization, bringing the total limit to $74.7 billion.NVIDIA Initiates Q3 2026 GuidanceFor the third quarter of fiscal 2026, NVIDIA anticipates revenues of $54 billion (+/-2%). The non-GAAP gross margin is projected to be 73.5% (+/-50 bps). Non-GAAP operating expenses are estimated at $4.2 billion.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates review.The consensus estimate has shifted 5.54% due to these changes.VGM ScoresCurrently, Nvidia has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a score of D on the value side, putting it in the bottom 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Nvidia has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. 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