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August 27, 2026 • Thursday edition • No hype, just perspective. |
Nvidia Beat by $4 Billion, Guided to $108 Billion, and Broke the Sell Pattern. Now Warsh Speaks. Nvidia delivered the quarter the bulls needed. Revenue came in at $96.2 billion, beating the $92.3 billion consensus by nearly $4 billion. Adjusted EPS was $2.22 versus $2.09 expected. Data Center revenue hit $89.0 billion, up 117% year over year. And the Q3 guide of $108 billion crushed the $104 billion consensus by $4 billion. The stock rose roughly 4% after hours to about $219, breaking the five-quarter pattern of selling after earnings. S&P 500 futures are up about 0.7% this morning. Dow futures are up roughly 180 points. Jackson Hole begins today. Tomorrow at 10:00 a.m. ET, Chair Warsh delivers his first keynote with yesterday’s sticky PCE (3.7% headline, 3.3% core) in hand. The AI trade just got its catalyst. The question is whether the Fed lets the rally run. |
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The Scoreboard |
• Nvidia Q2: Revenue $96.2 billion, up approximately 122% year over year, beating the $92.3 billion consensus. Adjusted EPS $2.22 vs $2.09 expected. Data Center revenue $89.0 billion, up 117%. Net income more than doubled. Gross margin held above 75%. Jensen Huang said “compute is revenue” and projected Vera Rubin production shipments beginning in Q3.
• Q3 guide: Revenue $108 billion, plus or minus 2%, crushing the $104 billion consensus by $4 billion. FY28 revenue expected to grow approximately 70%. CPU revenue expected to more than double in FY28. Nvidia and AWS announced a major expansion of their strategic collaboration. Supply expected to remain a bottleneck through the end of FY28.
• Stock reaction: Nvidia initially flat at $209.14 after the print, then climbed to $218.77, up about 4%, as the Q3 guide and FY28 outlook sank in. The daily range ran from $203.50 to $220.80, a roughly $400 billion market-cap swing. The five-quarter sell-after-earnings pattern broke.
• Wednesday close: S&P 500 slipped 0.02% to 7,675.70. Dow fell 0.21% to 53,463.88. Nasdaq dipped 0.16%. Markets traded cautiously ahead of the Nvidia print. Meta agreed to a $16.7 billion settlement, the largest tech settlement in US history.
• PCE recap: Headline held at 3.7% year over year, above the 3.6% consensus. Core matched at 3.3%. Services prices rose 0.3%. Goods prices fell 0.1%. Real spending was flat. Personal income rose 0.4%. Saving rate 3.0%.
• Today and tomorrow: Jackson Hole begins today. Chair Warsh’s keynote tomorrow at 10:00 a.m. ET. Weekly jobless claims at 8:30 a.m. today. S&P 500 futures up about 0.7%. Nasdaq futures up roughly 1.4%.
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Details |
The Pattern Broke
For four consecutive quarters, Nvidia beat Wall Street’s estimates and watched its stock fall. Each time, the beat was strong. Each time, it was priced in. Last night, the pattern broke. Revenue of $96.2 billion did not merely beat the $92.3 billion consensus; it exceeded it by $4 billion, a gap wide enough to re-rate the stock. The Q3 guide of $108 billion crushed the $104 billion consensus by another $4 billion. And the FY28 outlook, with revenue expected to grow approximately 70%, gave the market a longer runway than it had been pricing. The stock swung from a low of $203.50 during the regular session to $220.80 in after-hours trading, a range that represents roughly a $400 billion market-cap move.
What changed. Two things separated this quarter from the prior four. First, the magnitude of the Q3 guide: $108 billion implies quarterly revenue acceleration, not deceleration. The market had been worried that Nvidia’s growth rate would compress as the base effect of the AI buildout grew larger. A guide that exceeds consensus by $4 billion dismisses that concern for at least the next two quarters. Second, the Vera Rubin announcement: Huang said production shipments of the next-generation chip would begin in Q3, ahead of schedule. That means Nvidia’s product cycle is accelerating, not stalling, and the upgrade cycle from Blackwell to Vera Rubin gives hyperscalers a reason to keep spending.
What did not change. The PCE report that arrived yesterday morning sits on Warsh’s desk. Headline inflation at 3.7%, above consensus. Core at 3.3%, unchanged for two consecutive months, 1.3 percentage points above the Fed’s 2% target. Services inflation rising 0.3%. Real consumer spending flat. The Nvidia beat does not change the inflation picture. It does not change the consumer picture. And it does not change the Fed’s calculus on rates. The AI trade can rally on earnings while the broader market remains constrained by sticky inflation and high borrowing costs. Those two realities can coexist, but they pull in opposite directions for a 60/40 portfolio.
Tomorrow’s speech. Chair Warsh delivers his first Jackson Hole keynote at 10:00 a.m. ET Friday. He inherits a dataset that argues both ways: core PCE stuck at 3.3% (hawkish), payrolls negative in July (dovish), consumer confidence at a 7-month low (dovish), but flash PMI at a 52-month high (hawkish). The FOMC minutes showed “many participants” saw higher rates as “likely necessary.” September hike odds sit near 31% on CME FedWatch. The speech will signal whether Warsh prioritizes the inflation data or the growth data, and that signal will determine whether the Nvidia-led rally has room to run or gets capped by rate expectations. Warsh also raised the idea of reducing annual FOMC meetings from eight to six, a structural change the market has not yet priced.
Where that leaves you. Nvidia gave the AI trade the catalyst it needed. The stock is up 4% in after-hours. S&P futures are pointing to a gap higher at the open. But the PCE number is sticky, the consumer is weakening, and Warsh speaks tomorrow. A six-month T-bill near 5.1% still outearns the equity risk premium. The Nvidia rally does not change that math. It changes the narrative around AI, and narratives drive short-term price. The medium-term direction depends on one speech tomorrow morning.
The AI trade got its answer: earnings are real, the buildout is accelerating, and the guide says it continues. Now the market waits for the other answer: what does the Fed chair think about 3.3% core inflation and a consumer that is losing confidence? Tomorrow at 10:00 a.m. ET, Warsh tells you.
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Harold Winston Thirty years reading markets for a living. No hype, just perspective. |
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