NVIDIA (NVDA) said on Oct. 27, 2026 that it will expand its partnership with Meta on the Muse family of AI models and invest in Meta's equity offering. Meta plans to deploy more Nvidia chips and networking gear. It matters because it ties a major customer closer to Nvidia just as Nvidia's quarterly revenue, at $96.22B in the second quarter of fiscal 2027, more than doubled from a year earlier.
Key facts
- Oct. 27, 2026: Nvidia and Meta announced an expanded collaboration on Meta's Muse models and AI agents, according to Nvidia's release. Nvidia will also invest in Meta's equity offering.
- Quarter ended July 26, 2026 (Q2 FY2027): revenue was $96.22B, up 105.9% from the year-ago quarter. Net income was $59.69B, up 125.9%.
- Aug. 26, 2026: Nvidia reported earnings per share (EPS) of 2.22 against an analyst estimate of 2.09, and revenue of $96.22B against an estimate of $92.27B.
- Oct. 26, 2026: the share price was $216, up 2.39% on the latest quote. The 52-week range is $164.27 to $243.37.
- Nov. 18, 2026: next expected earnings date, with an EPS estimate of 2.47 and a revenue estimate of $108.80B.
What happened
According to its release, Nvidia and Meta will work together on Muse, Meta's family of AI models and agents, to improve both training and inference. Training is teaching a model. Inference is running it for users. The companies said Muse has shown strong benchmark results and rising consumer downloads since launch, and that they will tune the whole software and hardware chain to lower the total cost of running it.
Meta said it intends to expand its use of Nvidia's Vera Rubin chips and Vera CPUs. It will also use Nvidia's Spectrum-X Ethernet networking and BlueField-4 data-processing chips. The two companies will consider further work on OpenShell and Sentry, Nvidia tools for deploying AI agents safely and monitoring what they do.
Nvidia also said it will invest in Meta's equity offering. That is a multibillion-dollar investment, according to news reports, and the release says it is subject to closing conditions. An investment in a customer is unusual: Nvidia is putting money into a company that spends heavily on Nvidia products. Supporters see a deeper partnership. Skeptics may see some circularity, where a supplier's cash helps fund the demand for its own products.
CEO Jensen Huang said AI agents "change how we use computers, from operating applications to working with intelligent agents." Meta CEO Mark Zuckerberg said Muse is "how we bring personal superintelligence to everyone."
Why it matters for investors
The business behind the deal. Data Center revenue, which covers chips and systems sold to cloud and AI customers, was $89.02B in the quarter ended July 26, 2026. In the year-ago quarter it was $41.10B. Nvidia's segment labels changed between the two periods, so the other categories are not directly comparable. The latest quarter lists Edge Computing at $7.20B. By region, the United States contributed $60.07B, Taiwan $26.98B and China $7.88B.
Margins held at a high level. Over the last five quarters, gross margin (revenue left after the direct cost of making products) moved from 72.4% in the quarter ended July 2025 to 75.0% in the quarter ended July 2026. Operating margin rose each quarter, from 60.8% to 66.2%. So growth has not come at the cost of profitability. Revenue climbed each quarter: $46.74B, $57.01B, $68.13B, $81.61B and then $96.22B.
Cash flow was uneven. Free cash flow (cash from operations minus capital spending) was $21.40B in the latest quarter, versus $48.59B in the quarter ended April 26, 2026. Operating cash flow was $24.08B, down from $50.34B. Dividends paid were $6.05B, a far larger payment than the roughly $243.0M in each of the prior quarters. Buybacks were $19.73B. Even so, free cash flow in the latest quarter was higher than the $13.47B of a year earlier. The company ended the quarter with $99.37B in cash and short-term investments and $38.86B in total debt.
Valuation versus peers. On trailing 12-month earnings, Nvidia trades at a price-to-earnings (P/E) ratio of 27.17. That means investors pay about $27 for each $1 of yearly profit. For comparison:
- Advanced Micro Devices (AMD): P/E 134.84, net margin 15.6%
- Arm Holdings (ARM): P/E 230.26, net margin 20.2%
- Broadcom (AVGO): P/E 40.84, net margin 42.9%
- Cerebras Systems (CBRS): P/E -33.22 (it loses money), net margin -75.3%
Analysts. Of 79 ratings, 2 are strong buy, 58 buy, 16 hold and 3 sell, for a consensus of "Buy". Price targets average $339.17, with a median of $325.00, a high of $515.00 and a low of $210.00. The shares were at $216 on Oct. 26, close to the low end of that range. A financial-data model (a discounted cash flow estimate, which values a company from projected cash) gives $228.04 per share. Analysts' consensus expects revenue of $220.86B for the period ending April 26, 2028, and EPS of 4.95. These are estimates, not results.
Our MoonshotScore. Stock Expert AI's MoonshotScore V2 for Nvidia is 97.6, rated Exceptional. Relative to its sector, the pillars are quality 99, growth 97, safety 92, momentum 77 and valuation 33. Valuation is the weak spot: Nvidia is not cheap compared with other companies in its sector, even though its P/E is below several chip peers.
What could go wrong
- Customer concentration and circularity. Nvidia's growth depends on a small number of very large buyers. Investing in one of them may draw scrutiny over how much demand is supported by Nvidia's own money.
- Spending cycles. If big technology companies slow their AI spending, Nvidia's revenue would feel it quickly. Nvidia's release lists reliance on outside manufacturers, competition, product defects and changing laws as risks.
- Competition. The deal comes while Broadcom and AMD also supply AI customers, and a Barron's headline pointed to Broadcom as the next company to watch.
- Valuation and sentiment. The weak valuation pillar means expectations are high. Among the 30 most recent insider filings, those from the last 90 days show 0 open-market purchases and 19 sales, though older filings in that window may be missing.
- Cash flow swings. Quarterly cash flow has been uneven, and the latest quarter was lower than the one before it.
What to watch next
- Nov. 18, 2026 earnings: whether revenue meets the $108.80B estimate and EPS the 2.47 estimate, and what Nvidia says about Meta and other large customers.
- Deal terms: the closing of the Meta investment and any disclosure of its size and accounting.
- Margins: whether gross margin stays near 75.0% as new Vera Rubin products ramp.
- Cash flow: whether operating cash flow returns toward earlier levels.
- Competitors: announcements from Broadcom and AMD with large AI customers.
Frequently asked questions
Q: What did Nvidia announce with Meta on Oct. 27, 2026?
Nvidia said it will expand its work with Meta on the Muse family of AI models and agents. Meta intends to deploy more Nvidia chips and networking products, and Nvidia will invest in Meta's equity offering. The two will also consider using Nvidia's tools for safe deployment and monitoring of AI agents.
Q: Is Nvidia stock expensive after this news?
On trailing earnings, Nvidia's P/E of 27.17 is lower than AMD's 134.84, Arm's 230.26 and Broadcom's 40.84. Our MoonshotScore valuation pillar is only 33, which means it ranks weakly against its sector on valuation. This is data, not advice on whether to buy or sell.
Q: How did Nvidia's latest quarter look?
In the quarter ended July 26, 2026, revenue was $96.22B, up 105.9% from a year earlier, and net income was $59.69B. Reported EPS of 2.22 beat the 2.09 estimate, and revenue beat the $92.27B estimate. Free cash flow was $21.40B, lower than the prior quarter.
This is educational content, not investment advice. Past performance does not guarantee future results.