NVIDIA CORP 10-Q

Item 1. Financial Statements (Unaudited) NVIDIA Corporation and Subsidiaries Condensed Consolidated Statements of Income (In millions, except per share data) (Unaudited) Three Months Ended Six Months Ended Jul 26, 2026 Jul 27, 2025 Jul 26, 2026 Jul 27, 2025 Revenue $ 96,221 $ 46,743 $ 177,837 $ 90,805 Cost of revenue 24,079 12,890 44,538 30,284 Gross profit 72,142 33,853 133,299 60,521 Operating expenses Research and development 7,054 4,291 13,375 8,280 Sales, general and administrative 1,354 1,122 2,654 2,163 Total operating expenses 8,408 5,413 16,029 10,443 Operating income 63,734 28,440 117,270 50,078 Other income, net 7,773 2,766 24,140 3,039 Income before income tax 71,507 31,206 141,410 53,117 Income tax expense 11,819 4,784 23,400 7,920 Net income $ 59,688 $ 26,422 $ 118,010 $ 45,197 Net income per share: Basic $ 2.47 $ 1.08 $ 4.87 $ 1.85 Diluted $ 2.46 $ 1.08 $ 4.85 $ 1.84 Weighted average shares used in per share computation: Basic 24,190 24,366 24,238 24,404 Diluted 24,285 24,532 24,338 24,571 See accompanying Notes to Condensed Consolidated Financial Statements. 3 NVIDIA Corporation and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (In millions) (Unaudited) Three Months Ended Six Months Ended Jul 26, 2026 Jul 27, 2025 Jul 26, 2026 Jul 27, 2025 Net income $ 59,688 $ 26,422 $ 118,010 $ 45,197 Other comprehensive income (loss), net of tax Available-for-sale securities: Net change in unrealized gain (loss) ( 102 ) ( 52 ) ( 180 ) 87 Cash flow hedges: Net change in unrealized gain (loss) ( 60 ) 36 ( 23 ) 55 Other comprehensive income (loss), net of tax ( 162 ) ( 16 ) ( 203 ) 142 Total comprehensive income $ 59,526 $ 26,406 $ 117,807 $ 45,339 See accompanying Notes to Condensed Consolidated Financial Statements. 4 NVIDIA Corporation and Subsidiaries Condensed Consolidated Balance Sheets (In millions) (Unaudited) Jul 26, 2026 Jan 25, 2026 Assets Current assets: Cash and cash equivalents $ 22,443 $ 10,605 Marketable debt securities 34,143 39,065 Marketable equity securities 42,783 12,886 Accounts receivable, net 63,059 38,466 Inventories 31,575 21,403 Prepaid expenses and other current assets 3,409 3,180 Total current assets 197,412 125,605 Property and equipment, net 14,285 10,383 Operating lease assets 5,390 2,867 Goodwill 21,125 20,832 Intangible assets, net 2,998 3,306 Deferred income tax assets 12,159 13,258 Non-marketable securities 51,157 22,251 Other assets 15,746 8,301 Total assets $ 320,272 $ 206,803 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 15,059 $ 9,812 Accrued and other current liabilities 26,960 21,352 Short-term debt 1,000 999 Total current liabilities 43,019 32,163 Long-term debt 32,366 7,469 Long-term operating lease liabilities 4,985 2,572 Other long-term liabilities 10,918 7,306 Total liabilities 91,288 49,510 Commitments and contingencies Shareholders’ equity: Preferred stock — — Common stock 24 24 Additional paid-in capital 9,828 10,118 Accumulated other comprehensive income (loss) ( 25 ) 178 Retained earnings 219,157 146,973 Total shareholders’ equity 228,984 157,293 Total liabilities and shareholders’ equity $ 320,272 $ 206,803 See accompanying Notes to Condensed Consolidated Financial Statements. 5 NVIDIA Corporation and Subsidiaries Condensed Consolidated Statements of Shareholders ’ Equity (Unaudited) Common Stock Outstanding Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Shareholders’ Equity Shares Amount (In millions, except per share data) Balances as of Apr 26, 2026 24,221 $ 24 $ 10,275 $ 137 $ 185,038 $ 195,474 Net income — — — — 59,688 59,688 Other comprehensive loss — — — ( 162 ) — ( 162 ) Issuance of common stock 32 — — — — — Tax withholding related to common stock ( 12 ) — ( 2,402 ) — — ( 2,402 ) Shares repurchased ( 94 ) — ( 152 ) — ( 19,522 ) ( 19,674 ) Cash dividends declared and paid ($ 0.25 per common share) — — — — ( 6,047 ) ( 6,047 ) Fair value of partially vested equity awards assumed in connection with acquisitions — — 80 — — 80 Stock-based compensation — — 2,027 — — 2,027 Balances as of Jul 26, 2026 24,147 $ 24 $ 9,828 $ ( 25 ) $ 219,157 $ 228,984 Balances as of Apr 27, 2025 24,388 $ 24 $ 11,475 $ 186 $ 72,158 $ 83,843 Net income — — — — 26,422 26,422 Other comprehensive loss — — — ( 16 ) — ( 16 ) Issuance of common stock 39 — — — — — Tax withholding related to common stock ( 13 ) — ( 1,848 ) — — ( 1,848 ) Shares repurchased ( 67 ) — ( 59 ) — ( 9,599 ) ( 9,658 ) Cash dividends declared and paid ($ 0.01 per common share) — — — — ( 244 ) ( 244 ) Stock-based compensation — — 1,632 — — 1,632 Balances as of Jul 27, 2025 24,347 $ 24 $ 11,200 $ 170 $ 88,737 $ 100,131 See accompanying Notes to Condensed Consolidated Financial Statements. 6 NVIDIA Corporation and Subsidiaries Condensed Consolidated Statements of Shareholders ’ Equity (Unaudited) Common Stock Outstanding Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Shareholders’ Equity Shares Amount (In millions, except per share data) Balances as of Jan 25, 2026 24,304 $ 24 $ 10,118 $ 178 $ 146,973 $ 157,293 Net income — — — — 118,010 118,010 Other comprehensive loss — — — ( 203 ) — ( 203 ) Issuance of common stock 69 — 515 — — 515 Tax withholding related to common stock ( 23 ) — ( 4,531 ) — — ( 4,531 ) Shares repurchased ( 203 ) — ( 309 ) — ( 39,536 ) ( 39,845 ) Cash dividends declared and paid ($ 0.26 per common share) — — — — ( 6,290 ) ( 6,290 ) Fair value of partially vested equity awards assumed in connection with acquisitions — — 80 — — 80 Stock-based compensation — — 3,955 — — 3,955 Balances as of Jul 26, 2026 24,147 $ 24 $ 9,828 $ ( 25 ) $ 219,157 $ 228,984 Balances as of Jan 26, 2025 24,477 $ 24 $ 11,237 $ 28 $ 68,038 $ 79,327 Net income — — — — 45,197 45,197 Other comprehensive income — — — 142 — 142 Issuance of common stock 89 — 370 — — 370 Tax withholding related to common stock ( 26 ) — ( 3,380 ) — — ( 3,380 ) Shares repurchased ( 193 ) — ( 151 ) — ( 24,010 ) ( 24,161 ) Cash dividends declared and paid ($ 0.02 per common share) — — — — ( 488 ) ( 488 ) Fair value of partially vested equity awards assumed in connection with acquisitions — — 22 — — 22 Stock-based compensation — — 3,102 — — 3,102 Balances as of Jul 27, 2025 24,347 $ 24 $ 11,200 $ 170 $ 88,737 $ 100,131 See accompanying Notes to Condensed Consolidated Financial Statements. 7 NVIDIA Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (In millions) (Unaudited) Six Months Ended Jul 26, 2026 Jul 27, 2025 Cash flows from operating activities: Net income $ 118,010 $ 45,197 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation expense 3,954 3,099 Depreciation and amortization 2,124 1,280 Deferred income taxes 982 ( 2,160 ) Gains from equity securities, net ( 23,707 ) ( 2,073 ) Other 222 ( 196 ) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable ( 24,590 ) ( 4,743 ) Inventories ( 10,204 ) ( 4,880 ) Prepaid expenses and other assets ( 6,480 ) 946 Accounts payable 4,125 2,255 Accrued and other current liabilities 8,015 3,075 Other long-term liabilities 1,970 979 Net cash provided by operating activities 74,421 42,779 Cash flows from investing activities: Proceeds from sales and maturities of debt securities 26,563 6,739 Proceeds from sales of equity securities 7,241 70 Purchases of equity securities ( 42,404 ) ( 1,245 ) Purchases of debt securities ( 21,777 ) ( 14,108 ) Purchases related to property and equipment and intangible assets ( 4,434 ) ( 3,122 ) Acquisitions, net of cash acquired ( 298 ) ( 677 ) Other ( 15 ) — Net cash used in investing activities ( 35,124 ) ( 12,343 ) Cash flows from financing activities: Proceeds related to issuance of debt, net of costs 24,896 — Proceeds related to employee stock plans 515 370 Payments related to repurchases of common stock ( 39,044 ) ( 23,815 ) Dividends paid ( 6,290 ) ( 488 ) Payments related to employee stock plan taxes ( 4,531 ) ( 3,380 ) Groq, Inc. ( 2,944 ) — Principal payments on property and equipment and intangible assets ( 92 ) ( 73 ) Other 31 — Net cash used in financing activities ( 27,459 ) ( 27,386 ) Change in cash and cash equivalents 11,838 3,050 Cash and cash equivalents at beginning of period 10,605 8,589 Cash and cash equivalents at end of period $ 22,443 $ 11,639 See accompanying Notes to Condensed Consolidated Financial Statements. 8 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1 - Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission, or SEC, Regulation S-X. The January 25, 2026, consolidated balance sheet was derived from our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 25, 2026, as filed with the SEC, but does not include all disclosures required by U.S. GAAP. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation of results of operations and financial position, have been included. The results for the interim periods presented are not necessarily indicative of the results expected for any future period. The following information should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 25, 2026. Certain prior fiscal year balances have been reclassified to conform to the current period presentation. Significant Accounting Policies There have been no material changes to our significant accounting policies disclosed in Note 1 - Organization and Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 25, 2026. Fiscal Year Fiscal year 2027 is a 53-week year, and fiscal year 2026 was a 52-week year, both ending on the last Sunday in January. The second quarters of fiscal years 2027 and 2026 were both 13-week quarters. The fourth quarter of fiscal year 2027 will be a 14-week quarter. Principles of Consolidation Our condensed consolidated financial statements include the accounts of NVIDIA Corporation and our wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from our estimates. Recently Issued Accounting Pronouncements Recent Accounting Pronouncements Not Yet Adopted In November 2024, the Financial Accounting Standards Board, or FASB, issued a new accounting standard requiring disclosures of certain additional expense information on an annual and interim basis, including, among other items, the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included within each income statement expense caption, as applicable. We will adopt this standard in the fiscal year 2028 annual report. We do not expect the adoption of this standard to have a material impact on our Consolidated Financial Statements other than additional disclosures. Note 2 - Stock-Based Compensation We recognize stock-based compensation expense from grants of restricted stock units, or RSUs, performance stock units, or PSUs, and market-based PSUs, and issuances under our employee stock purchase plan, or ESPP. 9 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) Condensed Consolidated Statements of Income include stock-based compensation expense as follows: Three Months Ended Six Months Ended Jul 26, 2026 Jul 27, 2025 Jul 26, 2026 Jul 27, 2025 (In millions) Cost of revenue $ 71 $ 58 $ 139 $ 123 Research and development 1,551 1,191 3,010 2,254 Sales, general and administrative 405 375 805 722 Total $ 2,027 $ 1,624 $ 3,954 $ 3,099 Equity Award Activity The following is a summary of our equity award transactions under our equity incentive plans: RSUs, PSUs and Market-based PSUs Outstanding Number of Shares Weighted Average Grant-Date Fair Value Per Share (In millions, except per share data) Balance as of Jan 25, 2026 189 $ 81.51 Granted 49 $ 183.74 Vested ( 63 ) $ 54.60 Canceled and forfeited ( 7 ) $ 102.16 Balance as of Jul 26, 2026 168 $ 120.41 As of July 26, 2026, aggregate unearned stock-based compensation expense was $ 19.4 billion, which is expected to be recognized over a weighted average period of 2.6 years for RSUs, PSUs, and market-based PSUs, and 0.9 years for ESPP. Note 3 - Net Income Per Share The following are the basic and diluted net income per share computations for the periods presented: Three Months Ended Six Months Ended Jul 26, 2026 Jul 27, 2025 Jul 26, 2026 Jul 27, 2025 (In millions, except per share data) Numerator: Net income $ 59,688 $ 26,422 $ 118,010 $ 45,197 Denominator: Basic weighted average shares 24,190 24,366 24,238 24,404 Dilutive impact of outstanding equity awards 95 166 100 167 Diluted weighted average shares 24,285 24,532 24,338 24,571 Net income per share: Basic (1) $ 2.47 $ 1.08 $ 4.87 $ 1.85 Diluted (2) $ 2.46 $ 1.08 $ 4.85 $ 1.84 Anti-dilutive equity awards excluded from diluted net income per share 7 3 52 60 (1) Net income divided by basic weighted average shares. (2) Net income divided by diluted weighted average shares. Diluted net income per share was computed using the weighted average number of common and potentially dilutive shares outstanding during the period, using the treasury stock method. 10 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) Note 4 - Intangible Assets and Goodwill The components of our intangible assets are as follows: Jul 26, 2026 Jan 25, 2026 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (In millions) Acquisition-related intangible assets $ 5,737 $ ( 2,974 ) $ 2,763 $ 5,656 $ ( 2,580 ) $ 3,076 Patents and licensed technology 557 ( 322 ) 235 528 ( 298 ) 230 Total intangible assets $ 6,294 $ ( 3,296 ) $ 2,998 $ 6,184 $ ( 2,878 ) $ 3,306 Amortization expense associated with intangible assets was $ 237 million and $ 84 million for the second quarter, and $ 470 million and $ 243 million for the first half, of fiscal years 2027 and 2026, respectively. The following table outlines the estimated future amortization expense related to the net carrying amount of intangible assets as of July 26, 2026: Future Amortization Expense (In millions) Fiscal Year: 2027 (the second half of fiscal year 2027) $ 482 2028 795 2029 642 2030 528 2031 468 2032 and thereafter 83 Total $ 2,998 In the first half of fiscal year 2027, goodwill increased by $ 293 million, which was allocated to our Compute & Networking reporting unit. 11 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) +42.8+Note 5 - Cash Equivalents and Marketable Securities Cash equivalents and marketable securities including debt and equity securities are measured at fair value using quoted prices in active markets for identical assets (Level 1) or for similar assets or use of other observable inputs (Level 2). The following is a summary of cash equivalents and marketable securities: Jul 26, 2026 Pricing Category Cost or Amortized Cost Unrealized Gain Unrealized Loss Estimated Fair Value Reported as Cash Equivalents Marketable Debt Securities Marketable Equity Securities Other Assets (In millions) Debt securities issued by the U.S. Treasury Level 2 $ 45,367 $ 8 $ ( 54 ) $ 45,321 $ 12,318 $ 33,003 $ — $ — Debt securities issued by U.S. government agencies Level 2 1,541 — ( 2 ) 1,539 399 1,140 — — Money market funds Level 1 8,633 — — 8,633 8,633 — — — Publicly-held equity securities (1) (2) Level 1 36,934 — — 31,977 4,957 Publicly-held equity securities (1) (3) Level 2 10,806 — — 10,806 — Total $ 55,541 $ 8 $ ( 56 ) $ 103,233 $ 21,350 $ 34,143 $ 42,783 $ 4,957 (1) Included $ 36.9 billion of investments that are subject to short-term lock-up restrictions on the ability to sell. (2) The long-term portion of publicly-held equity securities, which are subject to lock-up restrictions through December 2027 of $ 5.0 billion as of July 26, 2026, was included in Other assets. (3) Included investments in unregistered warrants and preferred stock convertible to common stock in public companies. Publicly-held equity securities are subject to market price volatility. Net unrealized gains on investments in publicly-held equity securities held at period end were $ 1.5 billion and $ 12.5 billion for the second quarter and first half of fiscal year 2027, respectively. Net unrealized gains on investments in publicly-held equity securities held at period end were $ 1.9 billion and $ 1.7 billion for the second quarter and first half of fiscal year 2026, respectively. 12 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) Jan 25, 2026 Pricing Category Cost or Amortized Cost Unrealized Gain Unrealized Loss Estimated Fair Value Reported as Cash Equivalents Marketable Debt Securities Marketable Equity Securities Other Assets (In millions) Debt securities issued by the U.S. Treasury Level 2 $ 21,635 $ 77 $ ( 3 ) $ 21,709 $ — $ 21,709 $ — $ — Corporate debt securities Level 2 15,410 92 ( 3 ) 15,499 345 15,154 — — Debt securities issued by U.S. government agencies Level 2 2,157 4 — 2,161 — 2,161 — — Certificates of deposit Level 2 110 — — 110 110 — — — Foreign government bonds Level 2 40 1 — 41 — 41 — — Money market funds Level 1 7,830 — — 7,830 7,830 — — — Publicly-held equity securities (1) (2) Level 1 17,726 — — 12,886 4,840 Total $ 47,182 $ 174 $ ( 6 ) $ 65,076 $ 8,285 $ 39,065 $ 12,886 $ 4,840 (1) Included $ 10.5 billion of investments that are subject to short-term lock-up restrictions on the ability to sell. (2) The long-term portion of publicly-held equity securities, which are subject to lock-up restrictions through December 2027 of $ 4.8 billion as of January 25, 2026, was included in Other assets. As of July 26, 2026, and January 25, 2026, debt securities of $ 42.0 billion and $ 13.1 billion, respectively, in a continuous loss position had been so for less than 12 months, and the related unrealized losses were not significant. As of July 26, 2026, the estimated fair values of debt securities included in cash equivalents and marketable debt securities were $ 46.9 billion, consisting of $ 41.0 billion due in less than one year and $ 5.9 billion due in one to five years. 4Note 6 - Non-marketable Securities Non-marketable Equity Securities Our non-marketable equity securities are primarily in privately-held companies carried at cost less impairment, and adjusted for observable price changes. We value investments using observable comparable transactions and other inputs including volatility, expected time to liquidity, the risk-free rate, and security-specific rights and obligations. Adjustments to the carrying value of privately-held securities: Three Months Ended Six Months Ended Jul 26, 2026 Jul 27, 2025 Jul 26, 2026 Jul 27, 2025 (In millions) Balance at beginning of period $ 42,336 $ 3,240 $ 22,251 $ 3,387 Adjustments related to non-marketable equity securities: Net additions 13,106 299 31,005 948 Unrealized gains (1) 4,900 267 7,504 330 Reclassification (2) ( 12,323 ) ( 5 ) ( 12,712 ) ( 848 ) Impairments and unrealized losses (1) ( 121 ) ( 2 ) ( 150 ) ( 18 ) Balance at end of period $ 47,898 $ 3,799 $ 47,898 $ 3,799 (1) Unrealized gains, losses, and impairments are recognized in Other income, net, in the Condensed Consolidated Statements of Income. (2) Included reclassifications primarily related to marketable securities following public market trading. 13 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) Non-marketable equity securities had cumulative gross unrealized gains of $ 9.1 billion and $ 661 million, and cumulative gross unrealized losses and impairments of $ 250 million and $ 93 million as of July 26, 2026, and July 27, 2025, respectively. Equity Method Investments We had $ 3.3 billion of investments in infrastructure financiers accounted for using the equity method as of July 26, 2026. Those equity method investments deemed to be variable interest entities, or VIEs, had a maximum loss exposure, including carrying values and future committed amounts, of $ 4.7 billion as of July 26, 2026. We have determined we are not the primary beneficiary of our VIE investments and, therefore, do not consolidate the VIEs in our consolidated financial statements. Income from equity method investments is recognized in Other income, net, and was not significant for the second quarter and first half of fiscal year 2027. Note 7 - Supplemental Financial Statement Information We refer to customers who purchase products directly from NVIDIA as direct customers, such as add-in board manufacturers, or AIBs, distributors, original design manufacturers, or ODMs, original equipment manufacturers, or OEMs, cloud service providers, or CSPs, AI model makers, and system integrators. Certain direct customers may use either internal resources or third-party system integrators to complete their build. Five direct customers accounted for 22 %, 14 %, 13 %, 11 %, and 10 % of our accounts receivable balance as of July 26, 2026. Three direct customers accounted for 25 %, 18 %, and 13 % of our accounts receivable balance as of January 25, 2026. Payment from customers is generally due shortly after delivery of our products. In certain cases, for investment-grade customer purchases, we have and may in the future provide longer payment terms ranging from 90 days up to one year to assist customers with large data center builds depending on size. Certain balance sheet components were as follows: Jul 26, 2026 Jan 25, 2026 Inventories: (In millions) Raw materials $ 11,341 $ 3,807 Work in process 13,377 8,822 Finished goods 6,857 8,774 Total inventories (1) $ 31,575 $ 21,403 (1) We recognized inventory provisions of $ 784 million and $ 886 million for the second quarter, and $ 1.6 billion and $ 3.2 billion for the first half, of fiscal years 2027 and 2026, respectively, in Cost of revenue. Property and Equipment: Property, equipment, and intangible assets acquired but not paid for in the first half of fiscal years 2027 and 2026 were $ 1.2 billion and $ 1.1 billion, respectively. Jul 26, 2026 Jan 25, 2026 Accrued and Other Current Liabilities: (In millions) Customer program accruals $ 7,391 $ 5,318 Taxes payable 5,206 2,669 Deferred revenue (1) 4,616 1,379 Product warranty 2,938 2,807 Excess inventory purchase obligations (2) 2,138 2,739 Accrued payroll and related expenses 1,206 1,146 Accrued purchase consideration (3) 986 3,921 Other 2,479 1,373 Total accrued and other current liabilities $ 26,960 $ 21,352 (1) Included customer advances and unearned revenue primarily related to hardware and software support, and license and development arrangements. The balance as of July 26, 2026, and January 25, 2026, included $ 2.8 billion and $ 160 million of customer advances, respectively. 14 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) (2) We recognized $ 201 million and $ 137 million for the second quarter, and $ 501 million and $ 3.1 billion for the first half, of fiscal years 2027 and 2026, respectively, in Cost of revenue. (3) Related to the Groq, Inc. non-exclusive license agreement. Jul 26, 2026 Jan 25, 2026 Other Long-Term Liabilities: (In millions) Income tax payable (1) $ 5,602 $ 3,958 Deferred revenue (2) 1,796 1,193 Deferred income tax 1,619 1,774 Other 1,901 381 Total other long-term liabilities $ 10,918 $ 7,306 (1) Primarily comprised of unrecognized tax benefits and related interest and penalties. (2) Included unearned revenue related to hardware and software support. Deferred Revenue The following table shows the changes in short- and long-term deferred revenue during the first half of fiscal years 2027 and 2026: Six Months Ended Jul 26, 2026 Jul 27, 2025 (In millions) Balance at beginning of period $ 2,572 $ 1,813 Deferred revenue additions (1) 17,709 8,275 Revenue recognized (2) ( 13,869 ) ( 8,053 ) Balance at end of period $ 6,412 $ 2,035 (1) Included $ 15.6 billion and $ 7.5 billion of customer advances for the first half of fiscal years 2027 and 2026, respectively. (2) Included $ 13.0 billion and $ 7.5 billion related to customer advances for the first half of fiscal years 2027 and 2026, respectively. We recognized revenue of $ 758 million and $ 479 million in the first half of fiscal years 2027 and 2026, respectively, that was included in the prior year-end deferred revenue balance. As of July 26, 2026, revenue related to remaining performance obligations from contracts greater than one year in length was $ 3.2 billion, which included $ 3.0 billion from deferred revenue and $ 244 million that has not yet been billed or recognized as revenue. Approximately 39 % of revenue from contracts greater than one year in length will be recognized over the next twelve months . Other Income, Net Other income, net, consisted of the following: Three Months Ended Six Months Ended Jul 26, 2026 Jul 27, 2025 Jul 26, 2026 Jul 27, 2025 (In millions) Interest income $ 496 $ 592 $ 1,037 $ 1,108 Interest expense ( 227 ) ( 62 ) ( 329 ) ( 124 ) Gains from equity securities, net 7,771 2,247 23,707 2,073 Other ( 267 ) ( 11 ) ( 275 ) ( 18 ) Other income, net $ 7,773 $ 2,766 $ 24,140 $ 3,039 15 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) Note 8 - Derivative Financial Instruments Foreign Currency Derivatives We primarily utilize foreign currency forward contracts to mitigate the impact of foreign currency exchange rate movements on our operating expenses. These foreign currency forward contracts for operating expenses are designated as accounting hedges. Gains or losses on the contracts are recognized in Accumulated other comprehensive income or loss and reclassified to Operating expenses when the related operating expenses are recognized in earnings. During the first half of fiscal years 2027 and 2026, the impact of foreign currency forward contracts designated as accounting hedges on other comprehensive income or loss was not significant and all such instruments were determined to be highly effective. We also entered into foreign currency forward contracts to mitigate the impact of foreign currency movements on monetary assets and liabilities. For our foreign currency contracts for assets and liabilities, the change in fair value of these non-designated contracts offsets the change in fair value of the hedged foreign currency-denominated monetary assets and liabilities, and is recognized in Other income, net. The fair values of our foreign currency contracts were not significant as of July 26, 2026, and January 25, 2026. As of July 26, 2026, all foreign currency contracts mature within 18 months. The gains and losses of our foreign currency contracts were not significant for the second quarter and first half of fiscal years 2027 and 2026. Land, Power, and Shell Guarantees for AI Clouds We entered into land, power, and shell guarantees for select AI cloud partners’ data center lease obligations in the event of their default. The guarantees are classified as credit derivatives, the fair values of which were not significant, with changes in fair values recognized in Other income, net. Public Company Warrants In the second quarter of fiscal year 2027, we received warrants to purchase shares of publicly-traded common stock with terms of three to five years . These warrants are classified as equity derivatives, initially recognized within Other assets, with the corresponding benefit substantially deferred. Subsequent valuation changes are recognized in Other income, net. As of July 26, 2026, the fair values of the equity derivatives, a Level 3 measurement, were $ 824 million . Derivative Financial Instrument Notional Values The table below presents the notional values of our derivatives outstanding: Jul 26, 2026 Jan 25, 2026 (In millions) Foreign currency contracts designated as accounting hedges $ 2,162 $ 1,765 Not designated as accounting hedges: Foreign currency contracts $ 2,252 $ 2,332 Land, power, and shell guarantees for AI clouds (1) $ 3,529 $ 3,530 Public company warrants $ 4,800 $ — Equity forward contract $ 1,000 $ — (1) The maximum gross exposure under all agreements is reduced as the partners make payments to the lessors over terms ranging from five to seven years. The partners have placed $ 712 million in escrow to partially mitigate our potential exposure, which is not reflected in the notional value. 16 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) Note 9 - Debt Expected Remaining Term (years) Effective Interest Rate Jul 26, 2026 Jan 25, 2026 (In millions) 3.20 % Notes Due 2026 0.1 3.31 % $ 1,000 $ 1,000 4.25 % Notes Due 2028 1.9 4.39 % 3,500 — 1.55 % Notes Due 2028 1.9 1.64 % 1,250 1,250 4.35 % Notes Due 2029 2.9 4.45 % 3,500 — 2.85 % Notes Due 2030 3.7 2.93 % 1,500 1,500 4.50 % Notes Due 2031 4.9 4.60 % 4,000 — 2.00 % Notes Due 2031 4.9 2.09 % 1,250 1,250 4.75 % Notes Due 2033 6.9 4.82 % 3,500 — 4.95 % Notes Due 2036 9.9 5.01 % 4,000 — 3.50 % Notes Due 2040 13.7 3.54 % 1,000 1,000 5.55 % Notes Due 2046 19.9 5.61 % 3,000 — 3.50 % Notes Due 2050 23.7 3.54 % 2,000 2,000 5.625 % Notes Due 2056 29.9 5.66 % 3,500 — 3.70 % Notes Due 2060 33.7 3.73 % 500 500 Unamortized debt discount and issuance costs ( 134 ) ( 32 ) Net carrying amount $ 33,366 $ 8,468 Less short-term portion ( 1,000 ) ( 999 ) Total long-term portion $ 32,366 $ 7,469 In June 2026, we issued an aggregate of $ 25.0 billion of senior unsecured notes across seven tranches for general corporate purposes. As of July 26, 2026, and January 25, 2026, the estimated fair value of debt was $ 31.4 billion and $ 7.5 billion, respectively. The estimated fair values are based on Level 2 inputs. Our notes are unsecured senior obligations. Existing and future liabilities of our subsidiaries will be effectively senior to the notes. Our notes pay interest semi-annually. We may redeem each of our notes prior to maturity, subject to a make-whole premium. The maturity dates of the notes are stated by calendar year. As of July 26, 2026, we complied with the required covenants under the outstanding notes. As of July 26, 2026, our commercial paper program had a capacity of $ 25.0 billion, with no amounts outstanding. Note 10 - Commitments and Contingencies Commitments We entered into strategic commitments across our supply, infrastructure, and partner ecosystems to capitalize on future growth opportunities and support our business. 17 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) Future commitments by fiscal year as of July 26, 2026, were as follows: Remainder of 2027 2028 2029 2030 2031 2032 and thereafter Total (In billions) Supply and capacity $ 92 $ 87 $ 88 $ 6 $ 5 $ 1 $ 279 Cloud service agreements 3 8 7 6 4 1 29 Data center leases not commenced — 1 1 2 1 20 25 Equity investments 18 3 2 2 — — 25 Capital expenditures 7 1 — — — — 8 Total $ 120 $ 100 $ 98 $ 16 $ 10 $ 22 $ 366 Supply and capacity – We have partnered with our extensive network to secure the necessary supply and critical components needed to meet demand for the next several years, increasing supply commitments from $ 119 billion last quarter to $ 279 billion as of July 26, 2026. These supply commitments are for our data center infrastructure systems, primarily memory and manufacturing facilities, to produce our products for long-term demand across current and future product architectures. We enter into agreements with our suppliers that allow them to procure inventory based upon our defined criteria, and in certain instances, these agreements may be cancelable, rescheduled, or adjustable for our business needs prior to placing firm orders. Changes to these agreements may result in additional costs. Cloud service agreements – These commitments provide the cloud infrastructure to support our research and development of our open models, such as NVIDIA Nemotron, Cosmos, and GR00T, and our autonomous vehicle software. Data center leases not commenced – These leases will be primarily used for engineering, product design, and testing of our compute chips, networking products, and systems. They are expected to begin between the third quarter of fiscal year 2027 and fiscal year 2033 and have terms up to twenty years . Many of the expected lease start dates are subject to and dependent on timing of facility construction completion. Refer to Note 14 of the Notes to Condensed Consolidated Financial Statements for additional information on our leases that have commenced and are recognized in our financial statements. Equity investments – We committed to make certain equity investments in AI model makers, infrastructure financiers, and other private companies, subject to certain contingencies. Capital expenditures – Our capital expenditures primarily include obligations for data center equipment and infrastructure used for engineering and manufacturing operations. Additional Commitments and Guarantees Securing land, power, and shell for data centers is a critical phase in the AI infrastructure buildout. We have entered into arrangements to assist select customers with securing the land, power, shell, and data center capacity needed to support their growth. These strategic commitments and guarantees may impact our financial results and are dependent on the performance of our customers and partners. Additional Commitments Future commitments by fiscal year as of July 26, 2026, were as follows: Remainder of 2027 2028 2029 2030 2031 2032 and thereafter Total (In billions) AI cloud agreements $ — $ 6 $ 8 $ 7 $ 6 $ 9 $ 36 Data center leases not commenced for third party — — 1 1 1 17 20 Total $ — $ 6 $ 9 $ 8 $ 7 $ 26 $ 56 AI cloud agreements – We have partnered with leading AI clouds to enable broader access to our AI infrastructure to serve AI startups, model builders, enterprises, research organizations and sovereign customers. Under these agreements, AI clouds procure our data center infrastructure products and we commit to cloud service agreements, which the AI clouds can unilaterally stop providing to us and sell to third-party customers at more advantageous rates. Our commitments 18 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) decrease as capacity is used by third-party customers or by us for our research and development efforts. If certain criteria are met, we will participate in revenue share generated by the AI clouds from third-party customers. Data center leases not commenced for third party – We have entered into data center leases with terms of approximately fifteen years that are expected to commence between fiscal year 2028 and fiscal year 2029. The expected lease start dates are subject to and dependent on timing of construction completion. We expect to reassign these data center leases to third parties. Refer to Note 14 of the Notes to Condensed Consolidated Financial Statements for additional information on our leases. Guarantees Land, power, and shell guarantees for AI clouds – We entered into land, power, and shell guarantees for select AI cloud partners’ data center lease obligations in the event of their default. The maximum gross exposure under all agreements is $ 3.5 billion. Refer to Note 8 of the Notes to Condensed Consolidated Financial Statements for additional information on our derivatives. SB Energy Corp. guarantees – In August 2026, we entered into guarantees, capped at a total of $ 105 billion, to provide credit support on a land, power, and shell buildout with affiliates of SB Energy Corp. (SB Energy) on behalf of a customer, an affiliate of OpenAI Group PBC (OpenAI), related to leases for approximately 4.25 gigawatts of IT load in the aggregate at SB Energy’s PORTS Technology Campus in Pike County, Ohio. Each guarantee generally becomes effective upon commencement of the applicable lease, with corresponding guarantee amounts increasing, as each of the nine phases of data center construction is completed, the first of which is expected in fiscal year 2029. Our payment obligations under the guarantees are triggered upon certain tenant defaults and the amount is expected to decrease over the course of each phase’s 20 -year lease term. Our guarantees are limited to defined portions of lease and power payments and not the full cost of the site or all of the tenant’s obligations. The guarantees terminate upon certain events, including OpenAI achieving a satisfactory credit rating or after each respective lease term has completed. In exchange for the guarantees, the site will exclusively host NVIDIA AI infrastructure, subject to limited exceptions. We also hold an option, exercisable in our sole discretion, to provide additional credit support in phases for approximately 3.8 additional gigawatts as the site scales. The following table summarizes the maximum gross exposure related to our guarantees, including the SB Energy Corp. guarantees signed in August 2026 (in billions): Land, power, and shell guarantees for AI clouds $ 3.5 SB Energy Corp. guarantees 105.0 Total $ 108.5 Accrual for Product Warranty Liabilities The estimated product returns and product warranty activity consisted of the following: Three Months Ended Six Months Ended Jul 26, 2026 Jul 27, 2025 Jul 26, 2026 Jul 27, 2025 (In millions) Balance at beginning of period $ 2,948 $ 2,080 $ 2,807 $ 1,290 Additions 391 220 720 1,090 Utilization ( 401 ) ( 156 ) ( 589 ) ( 236 ) Balance at end of period $ 2,938 $ 2,144 $ 2,938 $ 2,144 For the second quarter and first half of fiscal years 2027 and 2026, the additions in product warranty liabilities primarily related to our Compute & Networking segment. We have provided indemnities for matters such as tax, product, and employee liabilities. We have included intellectual property indemnification provisions in our technology-related agreements with third parties. Maximum potential future payments cannot be estimated because many of these agreements do not have a maximum stated liability. We have not recognized any liability in our Condensed Consolidated Financial Statements for such indemnifications. 19 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) Litigation Securities Class Action and Derivative Lawsuits The plaintiffs in the putative securities class action lawsuit, captioned 4:18-cv-07669-HSG, initially filed on December 21, 2018 in the United States District Court for the Northern District of California, and titled In Re NVIDIA Corporation Securities Litigation, filed an amended complaint on May 13, 2020. The amended complaint asserted that NVIDIA and certain NVIDIA executives violated Section 10(b) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and SEC Rule 10b-5, by making materially false or misleading statements related to channel inventory and the impact of cryptocurrency mining on GPU demand between May 10, 2017 and November 14, 2018. Plaintiffs also alleged that the NVIDIA executives who they named as defendants violated Section 20(a) of the Exchange Act. Plaintiffs sought class certification, an award of unspecified compensatory damages, an award of reasonable costs and expenses, including attorneys’ fees and expert fees, and further relief as the Court may deem just and proper. On March 2, 2021, the district court granted NVIDIA’s motion to dismiss the complaint without leave to amend, entered judgment in favor of NVIDIA and closed the case. On March 30, 2021, plaintiffs filed an appeal from judgment in the United States Court of Appeals for the Ninth Circuit, case number 21-15604. On August 25, 2023, a majority of a three-judge Ninth Circuit panel affirmed in part and reversed in part the district court’s dismissal of the case, with a third judge dissenting on the basis that the district court did not err in dismissing the case. NVIDIA filed a petition for a writ of certiorari on March 4, 2024. On June 17, 2024, the Supreme Court of the United States granted NVIDIA’s petition for a writ of certiorari. After briefing and argument, the Supreme Court dismissed NVIDIA’s writ of certiorari as improvidently granted on December 11, 2024, and issued judgment on January 13, 2025. On February 20, 2025, the Ninth Circuit’s judgment, entered August 25, 2023 and corrected August 28, 2023, took effect, and the case was remanded to the district court for further proceedings. On March 25, 2026, the district court granted plaintiffs’ motion for class certification and certified a class of investors consisting of all persons or entities who purchased or otherwise acquired NVIDIA common stock between August 10, 2017, and November 15, 2018, inclusive, excluding certain persons and entities, such as NVIDIA’s officers and directors, and members of their immediate families, among others. The putative derivative lawsuit pending in the United States District Court for the Northern District of California, captioned 4:19-cv-00341-HSG, initially filed January 18, 2019 and titled In re NVIDIA Corporation Consolidated Derivative Litigation, was stayed pending resolution of the plaintiffs’ appeal in the In Re NVIDIA Corporation Securities Litigation action. On February 22, 2022, the court administratively closed the case, but stated that it would reopen the case once the appeal in the In Re NVIDIA Corporation Securities Litigation action is resolved. The case has not yet been reopened by the court. The lawsuit asserts claims, purportedly on behalf of us, against certain officers and directors of the Company for breach of fiduciary duty, unjust enrichment, waste of corporate assets, and violations of Sections 14(a), 10(b), and 20(a) of the Exchange Act based on the dissemination of allegedly false and misleading statements related to channel inventory and the impact of cryptocurrency mining on GPU demand. The plaintiffs are seeking unspecified damages and other relief, including reforms and improvements to NVIDIA’s corporate governance and internal procedures. The putative derivative actions initially filed September 24, 2019 and pending in the United States District Court for the District of Delaware, Lipchitz v. Huang, et al. (Case No. 1:19-cv-01795-MN) and Nelson v. Huang, et al. (Case No. 1:19-cv-01798-MN), were stayed pending resolution of the plaintiffs’ appeal in the In Re NVIDIA Corporation Securities Litigation action. On March 7, 2025, after the Supreme Court issued its judgment dismissing the Company’s petition for writ of certiorari as improvidently granted in the In Re NVIDIA Securities Litigation action, the district court adopted the parties’ stipulation to extend the stay until the final and complete resolution of the In Re NVIDIA Corporation Securities Litigation action. The lawsuits assert claims, purportedly on behalf of us, against certain officers and directors of the Company for breach of fiduciary duty, unjust enrichment, insider trading, misappropriation of information, corporate waste and violations of Sections 14(a), 10(b), and 20(a) of the Exchange Act based on the dissemination of allegedly false and misleading statements related to channel inventory and the impact of cryptocurrency mining on GPU demand. The plaintiffs seek unspecified damages and other relief, including disgorgement of profits from the sale of NVIDIA stock and unspecified corporate governance measures. Another putative derivative action was filed on October 30, 2023 in the Court of Chancery of the State of Delaware, captioned Horanic v. Huang, et al. (Case No. 2023-1096-KSJM). This lawsuit asserts claims, purportedly on behalf of us, against certain officers and directors of the Company for breach of fiduciary duty and insider trading based on the dissemination of allegedly false and misleading statements related to channel inventory and the impact of cryptocurrency mining on GPU demand. The plaintiffs seek unspecified damages and other relief, including disgorgement of profits from the sale of NVIDIA stock and reform of unspecified corporate governance measures. On August 11, 2025, the court granted the parties’ stipulation to voluntarily dismiss with prejudice plaintiff City of Westland Police and Fire Retirement System. This derivative matter is stayed pending the final resolution of In Re NVIDIA Corporation Securities Litigation action. 20 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) Accounting for Loss Contingencies As of July 26, 2026, there are no accrued contingent liabilities associated with the legal proceedings described above based on our belief that liabilities, while reasonably possible, are not probable. Further, any possible loss or range of loss in these matters cannot be reasonably estimated at this time. We are engaged in legal actions not described above arising in the ordinary course of business, as well as regulatory and government inquiries and investigations, and, while there can be no assurance of favorable outcomes, we believe that the ultimate outcome of these matters will not have a material adverse effect on our operating results, liquidity or financial position. These matters are subject to inherent uncertainties and if the ultimate outcome is unfavorable, there exists the possibility of a material adverse impact on our operating results, liquidity or financial position in the period the outcome becomes estimable and probable. Note 11 - Income Taxes Income tax expense was $ 11.8 billion and $ 4.8 billion for the second quarter, and $ 23.4 billion and $ 7.9 billion for the first half, of fiscal years 2027 and 2026, respectively. Income tax as a percentage of income before income tax was 16.5 % and 15.3 % for the second quarter, and 16.5 % and 14.9 % for the first half, of fiscal years 2027 and 2026, respectively. The effective tax rate increased primarily due to a lower percentage of tax benefits from stock-based compensation, foreign-derived deduction eligible income, and the U.S. federal research tax credit relative to the increase in income before income tax. Our effective tax rates for the first half of fiscal years 2027 and 2026 were lower than the U.S. federal statutory rate of 21% primarily due to tax benefits from foreign-derived deduction eligible income, income earned in jurisdictions that were subject to taxes at rates lower than the U.S. federal statutory tax rate, stock-based compensation, and the U.S. federal research tax credit. While we believe that we have adequately provided for all uncertain tax positions, or tax positions where we believe it is not more-likely-than-not that the position will be sustained upon review, amounts asserted by tax authorities could be greater or less than our accrued position. Accordingly, our provisions on federal, state, and foreign tax-related matters to be recognized in the future may change as revised estimates are made or the underlying matters are settled or otherwise resolved with the respective tax authorities. We are currently under examination by the Internal Revenue Service for our fiscal years 2023 and 2024. Note 12 - Shareholders’ Equity Capital Return Program We repurchased 94 million and 67 million shares of our common stock for $ 19.7 billion and $ 9.7 billion during the second quarter of fiscal years 2027 and 2026, respectively, and 203 million and 193 million shares of our common stock for $ 39.8 billion and $ 24.2 billion during the first half of fiscal years 2027 and 2026, respectively. On May 18, 2026, our Board of Directors approved an additional $ 80.0 billion in share repurchase authorization, without expiration. As of July 26, 2026, we were authorized, subject to certain specifications, to repurchase up to $ 99.3 billion of our common stock. We paid cash dividends to our shareholders of $ 6.0 billion and $ 244 million during the second quarter, and $ 6.3 billion and $ 488 million during the first half, of fiscal years 2027 and 2026, respectively. On May 18, 2026, we increased our quarterly cash dividend from $ 0.01 per share to $ 0.25 per share. The payment of future cash dividends is subject to our Board of Directors’ continuing determination that the declaration of dividends is in the best interests of our shareholders. Note 13 - Segment Information Our Chief Executive Officer is our chief operating decision maker, or CODM, and reviews financial information presented on an operating segment basis for purposes of making decisions and assessing financial performance. Our CODM assesses operating performance of each segment based on regularly provided segment revenue and segment operating income. Operating results by segment include costs or expenses directly attributable to each segment, and costs or expenses that are leveraged across our unified architecture and therefore allocated between our two segments. Our CODM reviews expenses on a consolidated basis, and expenses attributable to each segment are not regularly provided to our CODM. The Compute & Networking segment includes our Data Center accelerated computing and networking platforms and AI solutions and software, and automotive platforms and autonomous and electric vehicle solutions including software. 21 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) The Graphics segment includes GeForce GPUs for gaming and PCs, and Quadro/NVIDIA RTX GPUs for enterprise workstation graphics. Certain expenses are not allocated to either Compute & Networking or Graphics for purposes of making operating decisions or assessing financial performance. The expenses include stock-based compensation expense, corporate infrastructure and support costs, acquisition-related and other costs, and other non-recurring charges and benefits that our CODM deems to be enterprise in nature. Our CODM does not review any information regarding total assets on a reportable segment basis. There are no intersegment transactions. The accounting policies for segment reporting are the same as for our consolidated financial statements. The table below presents details of our reportable segments. Compute & Networking Graphics Total (In millions) Three Months Ended Jul 26, 2026 Revenue $ 88,299 $ 7,922 $ 96,221 Other segment items (1) 25,603 4,023 29,626 Operating income $ 62,696 $ 3,899 $ 66,595 Three Months Ended Jul 27, 2025 Revenue $ 41,331 $ 5,412 $ 46,743 Other segment items (1) 12,968 3,170 16,138 Operating income $ 28,363 $ 2,242 $ 30,605 Six Months Ended Jul 26, 2026 Revenue $ 162,850 $ 14,987 $ 177,837 Other segment items (1) 46,819 8,147 54,966 Operating income $ 116,031 $ 6,840 $ 122,871 Six Months Ended Jul 27, 2025 Revenue $ 80,920 $ 9,885 $ 90,805 Other segment items (1) 30,503 6,003 36,506 Operating income $ 50,417 $ 3,882 $ 54,299 (1) Other segment items primarily include product costs and inventory provisions, compensation and benefits excluding stock-based compensation expense, computing infrastructure expenses, and engineering development costs. Depreciation and amortization expense attributable to our Compute & Networking segment was $ 642 million and $ 383 million for the second quarter, and $ 1.2 billion and $ 684 million for the first half, of fiscal years 2027 and 2026, respectively. Depreciation and amortization expense attributable to our Graphics segment was $ 204 million and $ 148 million for the second quarter, and $ 399 million and $ 252 million for the first half, of fiscal years 2027 and 2026, respectively. Acquisition-related intangible amortization expense is not allocated to either Compute & Networking or Graphics for purposes of making operating decisions or assessing financial performance. 22 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) Reconciliation of segment operating income to consolidated income before income tax for the second quarter and first half of fiscal years 2027 and 2026 was as follows: Three Months Ended Six Months Ended Jul 26, 2026 Jul 27, 2025 Jul 26, 2026 Jul 27, 2025 (In millions) Segment operating income $ 66,595 $ 30,605 $ 122,871 $ 54,299 Stock-based compensation expense ( 2,027 ) ( 1,624 ) ( 3,954 ) ( 3,099 ) Unallocated operating expenses ( 612 ) ( 440 ) ( 1,178 ) ( 859 ) Acquisition-related and other costs ( 222 ) ( 101 ) ( 469 ) ( 263 ) Other income, net 7,773 2,766 24,140 3,039 Consolidated income before income tax $ 71,507 $ 31,206 $ 141,410 $ 53,117 Revenue by geographic region is designated based on the location of the headquarters of direct customers. The end customer and shipping location may be different from our direct customers’ headquarters location. Three Months Ended Six Months Ended Jul 26, 2026 Jul 27, 2025 Jul 26, 2026 Jul 27, 2025 (In millions) Geographic Revenue based upon Customer Headquarters Location: United States $ 60,074 $ 32,897 $ 123,843 $ 58,582 Taiwan 26,985 8,902 38,991 16,550 China (including Hong Kong) 7,880 3,985 12,430 13,644 Other 1,282 959 2,573 2,029 Total revenue $ 96,221 $ 46,743 $ 177,837 $ 90,805 Revenue from sales to customers headquartered outside of the United States accounted for 38 % and 30 % of total revenue for the second quarter and first half of fiscal year 2027, respectively, and 30 % and 35 % of total revenue for the second quarter and first half of fiscal year 2026, respectively. We refer to customers who purchase products directly from NVIDIA as direct customers, such as AIBs, distributors, ODMs, OEMs, CSPs, AI model makers, and system integrators. Certain direct customers may use either internal resources or third-party system integrators to complete their build. We refer to indirect customers as those who purchase products through our direct customers; indirect customers include CSPs, AI clouds, AI model makers, enterprises, and public sector entities. Our revenue is concentrated among a limited number of direct and indirect customers and this trend may continue. For the second quarter of fiscal year 2027, one direct customer represented 16 % of total revenue, which was primarily attributable to the Compute & Networking segment. For the first half of fiscal year 2027, three direct customers represented 16 %, 15 %, and 13 % of total revenue, all of which was primarily attributable to the Compute & Networking segment. For the second quarter of fiscal year 2026, two direct customers represented 23 % and 16 % of total revenue, all of which was primarily attributable to the Compute & Networking segment. For the first half of fiscal year 2026, two direct customers represented 20 % and 15 % of total revenue, all of which was primarily attributable to the Compute & Networking segment. In the first quarter of fiscal year 2027, we changed our presentation of revenue by market platform, and the comparable periods were recast. During the second quarter of fiscal year 2027, we reclassified a company from AI Clouds, Industrial, & Enterprise (ACIE) to Hyperscale due to a change in their business model and recast the prior period revenue associated with this company. 23 NVIDIA Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Continued) (Unaudited) Three Months Ended Six Months Ended Jul 26, 2026 Jul 27, 2025 Jul 26, 2026 Jul 27, 2025 (In millions) Revenue by Market Platform Data Center $ 89,023 $ 41,096 $ 164,269 $ 80,208 Hyperscale 48,710 24,168 91,761 46,428 AI Clouds, Industrial, & Enterprise 40,313 16,928 72,508 33,780 Edge Computing 7,198 5,647 13,568 10,597 Total revenue $ 96,221 $ 46,743 $ 177,837 $ 90,805 Note 14 - Leases Our lease obligations primarily consist of operating leases for our data centers and offices, with lease periods expiring between fiscal years 2027 and 2075. Future minimum lease obligations under our non-cancelable lease agreements as of July 26, 2026, were as follows: Operating Lease Obligations (In millions) Fiscal Year: 2027 (the second half of fiscal year 2027) $ 354 2028 718 2029 715 2030 648 2031 586 2032 and thereafter 4,186 Total 7,207 Less imputed interest 1,713 Present value of net future minimum lease payments 5,494 Less short-term operating lease liabilities 509 Long-term operating lease liabilities $ 4,985 As of July 26, 2026, our operating leases have a weighted average remaining lease term of 10.9 years and a weighted average discount rate of 4.69 %. As of January 25, 2026, our operating leases had a weighted average remaining lease term of 8.8 years and a weighted average discount rate of 4.38 %. Operating lease costs were $ 208 million and $ 109 million for the second quarter, and $ 379 million and $ 210 million for the first half, of fiscal years 2027 and 2026, respectively. Short-term, variable, and finance lease costs for the second quarter and first half of fiscal years 2027 and 2026 were not significant. Other information related to leases was as follows: Six Months Ended Jul 26, 2026 Jul 27, 2025 (In millions) Supplemental cash flows information Operating cash flow used for operating leases $ 353 $ 200 Operating lease assets obtained in exchange for lease obligations $ 2,792 $ 458 24