SAP expands sovereign cloud portfolio in Europe

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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SAP said it will invest more than €20 billion Euros in sovereign cloud efforts for European customers as it rolled out a series of offerings.

Sovereign cloud infrastructure is seen as a big growth area for technology vendors as countries aim to keep data in country and build up AI infrastructure.

For instance, SAP CEO Christian Klein said on the company's second quarter earnings conference call that European customers are focused on digital sovereignty. "Sovereignty is a huge aspect what SAP can contribute to the competitiveness of Europe, especially in areas like public sector and of course, also defense," said Klein.

According to SAP, SAP Cloud Infrastructure and SAP Sovereign Cloud On-Site will give European customers the ability to keep data and AI operations in the region. The effort also means that SAP will be running its own cloud for public sector and regulated customers in Europe.

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SAP said SAP Business Suite, SAP Business Technology Platform and SAP Business AI will run in SAP Sovereign Cloud. SAP's platform can run on any hyperscale cloud provider, local clouds and data centers run by the vendor.

Here's a look at the expansion of SAP Sovereign Cloud:

• SAP Cloud Infrastructure in Europe. SAP will offer infrastructure-as-a-service in its own data centers with open-source technologies. All data will be stored in the EU.
• SAP Sovereign Cloud On-Site. SAP will offer SAP-operated infrastructure in customer-owned or customer-selected data centers.
• Delos Cloud. SAP will offer Delos Cloud in Germany, a sovereign cloud for public sector customers.

SAP said SAP Sovereign Cloud will run in multiple countries.

Constellation Research analyst Holger Mueller said:

"SAP has known about the sovereign cloud demands and expectations of its European customer base for a long time, and evidently has not seen the traction and interest from its cloud partners to provide sufficient sovereign cloud offerings and reassurances. As a result, SAP is stepping up its offering. This is interesting as SAP has de-emphasized its inhouse cloud since a long time. Will SAP have the appetite to put the capital expenditures into its own cloud infrastructure? With the cloud at customer SAP is  setting itself up to significant more cloud revenue. Revenue in this category was NOT cloud revenue so far, but will be going forward."

Pondering the future of enterprise software

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Enterprise software will be reinvented with headless platforms, AI agents and enterprises that will aim to build their own systems. But a lot has to happen for enterprise software and SaaS incumbents to be disrupted.

The storyline that's emerging is one that revolves around enterprise software disruption due to AI agents that can traverse multiple systems and data silos. Today, enterprise software resides in buckets of acronyms--ERP, CRM, HCM--with multiple silos and data stores. AI agents threaten to break down that hierarchy.

Here's the big question: If all you're buying from a SaaS vendor is a browser-based user experience and a database underneath what are you really purchasing?

Simply put, enterprise applications are going to look a lot different in the future. Your guess on timing is as good as mine.

Speaking at a ServiceNow meetup in New York, IBM Research Vice President Sriram Raghava said agentic AI is going to create a new future for enterprise applications.

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Raghava noted that every inflection point in enterprise technology had a new application paradigm. The emergence of the web created a new application approach. Mobile also meant enterprises need to think through mobile apps.

"I see agents as basically the emerging application paradigm of the AI. We're going to have enterprise applications of the future," said Raghava. "They're all going to be agent based and the way we build applications for the future."

After Raghava spoke, I caught up with him for a follow-up. He said that the current chat-based approach may be part of the enterprise mix, but companies are going to need an abstraction layer that can handle tasks like model selection, use cases, processes and testing to ensure the data is correct.

The challenge for enterprises is that agentic AI constructs have been consumer-based and corporations will need more than model context protocol (MCP) and Agent2Agent (A2A) to address needs. Developers could leverage Android and Apple iOS to deploy mobile applications. That layer for enterprise AI agents isn't baked yet, but standards are moving faster than previous technology inflection points.

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I couldn't help but quip that the enterprise abstraction layers for quantum computing seem to be more baked than agentic AI. Raghava didn't disagree. Then again, quantum computing due to the raw science underneath needs an abstraction layer to work for real use cases.

MongoDB CEO Dev Ittycheria, speaking on the company's second quarter earnings call, hit a similar theme. "The quality of the output of these AI systems is high. Obviously, AI systems are probabilistic in nature, not deterministic in nature. So you can't always guarantee the output. You can hope that you've trained the models well. You've hoped that you've given it the right information, but you can't always guarantee the output," said Ittycheria. "It's going to take a little bit of time for people to really get comfortable that they can really deal with the last mile issues."

While we don't know how the future of enterprise software turns out, there are some common themes to ponder. Here's a look:

Build may catch up to buy. SVPG riffed on the build vs. buy equation for enterprises in the age of AI. Marty Cagan, founder and partner in charge of Product at SVPG, makes the argument that new AI-driven tools are going to make building enterprise applications more appealing. If you know the business logic behind the processes, you can likely use AI to spin up your own enterprise systems. The reality is that you’ll probably build and buy more.

Constellation Research analyst Esteban Kolsky said that the build-vs.-buy debate is picking up again. “This debate is not about building core functionality for business functions (e.g., ERP, CRM, and HCM) but about how to build a better infrastructure to support the growth of AI and coming technologies,” said Kolsky. “The debate about the value of having data available is over: We need data everywhere—protected, accessible, and available. However, the connections necessary to provide that, and the security and elements necessary to make it happen, are far from settled.”

Platforms win. ServiceNow has been able to expand into CRM and various industries due to a platform approach. The company aims to provide AI, data, workflow, security, automation and governance in one platform vs. SaaS vendors focused on a lucrative niche.

In a platform driven world, cloud providers could pull together building blocks that function as enterprise applications via AI agents without the business model disruption. Customers are used to consumption models with hyperscale cloud providers.

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Orchestration will be at the core. It's highly unlikely that enterprises will move to one data lake or application platform. The current state of heterogeneous enterprise systems will also be the future. Given that reality, orchestration between humans, processes, AI agents, data and tools will be critical.

Processes and value will be everything. Enterprise software will be sold by value and what process problems can be solved. Corporations will move toward solving problems and generating value over simply buying an acronym.

Terence Chesire, VP of CRM and Industry Workflows at ServiceNow, noted how Blackhawk Network, which processes gift cards for brands, was able to resolve disputes with scale and speed with AI agents with a 95% to 98% approval rate. "At the end of the day, AI needs to flow in an actual business process," said Chesire.

Box CEO Aaron Levie, speaking on the company's second quarter earnings call, said "enterprises are going to spend quite a bit of time trying to figure out what is the right AI architecture, what are the AI solutions that are working, which ones actually are driving ROI."

Don't assume that incumbent enterprise software vendors will win. Ittycheria said AI native startups have been choosing the company's Atlas platform as a foundation for their applications. Ittycheria cited DevRev as an example as a company looking to disrupt the help desk market.

A look at DevRev may indicate the future of enterprise software. An army of AI agents that can traverse multiple systems.

"Enterprises know that AI agents are going to bring a new level of automation and deliver deeper business insights to their businesses. Software has historically been good for automating processes that deal with structured data, take payroll, CRM systems, accounting, HRIS or supply chain workflows," said Box's Levie. "We can imagine a future where there are over 100x more agents than people inside of an organization, where any task you want done in a company is only a matter of how much compute you want to throw at the problem. You'll have agents running in the background and in parallel for any workflow around content that you can imagine."

The new enterprise software model will take time to develop. Speaking on Snowflake’s second earnings conference call, CEO Sridhar Ramaswamy was asked about whether AI and LLMs have plateaued. Ramaswamy’s answer was instructive. He said:

• "Every prediction that we have made about various kinds of plateauing has not really turned out to be true some 6- odd months later."
• "Experiences only become useful only when data that matters to the enterprise, all of the PDFs that are sitting in SharePoint or the various other data sources that there are also become accessible to these models."
• "You're going to see situations in which every complicated task that humans are involved in is going to have agentic solutions that are human-assisted where the model using tools does some of the work and then the humans guide the model to be able to be a lot more productive."
• "Think of all the work that happens in an enterprise, whether it is insurance claims processing or regulatory reporting or anomaly detection of various kinds or even going through the due diligence process for an M&A or a complicated legal thing that you have to do. Those are areas where application of data and AI is very much in its infancy. There are years of work ahead in terms of the value that we can get from AI."

BT150 zeitgeist: Inside a ransomware attack, AI project success

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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CxOs in the BT150 recount recovering from a ransomware attack and the ingredients for successful AI projects.

In our August BT150 meetup, CxOs in our network discussed cybersecurity and insurance as well as AI projects that actually work. The best advice was to not be blinded by LLMs. Here's a recap of our CxO call, which operates under Chatham House rules.

Live inside a ransomware attack. One CxO recounted a recent ransomware attack at his company. The attack exposed a big gap between cybersecurity awareness and execution. "The house of cards finally got revealed, which is good and bad, but also made me feel even more helpless," the CxO said.

Post-attack challenges abound. The company that was hit by the ransomware attack faced multiple challenges as it recovered. Here's a look:

• Insurance complications. It took nine months to get pricing for a cybersecurity insurance pricing. Many insurers didn't want to cover ransomware attacks, but would cover recovery.
• FBI guidance conflicts. The company was advised not to pay the ransom, but that advice conflicted with insurance policies that might cover ransom payments.
• Extended recovery. Daily meetings were held as the company tried to assess what files were taken, encrypted, or compromised.
• Boards are actively discussing ransomware recovery processes and debating whether it's better to get cybersecurity insurance or invest money in better security.

AI success

AI bubble or not, targeted success stories abound. CxOs discussed the ongoing conversation about the AI bubble and potential ramifications. It's a debate we've been having at Constellation Research. AI has been used for management training, warehouse operation optimizations and manufacturing. The key words across these AI projects were targeted, governed and measurable.

"Don't be blinded by large language models." The successful projects are likely to feature smaller models and industry models focused on use cases including physical AI.

Without governance, AI pilots fail. "I've seen a lot of projects where companies don't know what they're looking for and throwing AI blindly against the wall and hoping something sticks instead of identifying a specific process to fix," said one CxO.

Manufacturing's AI transformation. CxOs talked about the evolution toward industry 5.0 in manufacturing with the use of AI and digital twins driving transformation. AI agents are being developed for functional testing, defect detection and assembly line optimization. The takeaway: AI-enhanced processes are reinventing manufacturing.

Leadership and governance matters. CxOs on the call emphasized that successful AI implementation required strong leadership and governance frameworks. Participants noted that without proper executive oversight and targeted approaches, AI initiatives often fail to deliver expected value, reinforcing the importance of senior leadership in driving AI strategy and execution.

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Alibaba Cloud revenue growth accelerates in Q1, $19 bilion revenue run rate

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Alibaba's cloud business accelerated in the company's fiscal first quarter with revenue growth of 26% and an annual revenue run rate approaching $19 billion.

The company's Cloud Intelligence Group reported first quarter revenue of $4.66 billion, up 26% from a year ago, with earnings before interest, taxes and amortization of $2.34 billion. According to the Wall Street Journal, Alibaba has created its own chip for AI workloads similar to other cloud providers. AWS, Microsoft and Google Cloud all have custom silicon to lessen their dependence on Nvidia. In Alibaba’s case, the custom chip is designed to be a substitute for Nvidia’s H20.

Alibaba said its cloud revenue growth was driven by public cloud services as well as AI-related workloads.

For comparison, AWS has an annual revenue run rate of $124 billion compared to $50 billion for Google Cloud and $75 billion in annual sales for Microsoft Azure. Alibaba’s annual revenue run rate is in the ballpark of Oracle Cloud, which is at about $27 billion pending Oracle’s earnings report in September.

Alibaba, however, represents AI workloads in China, which has been leveraging open source models without the latest Nvidia chips to advance its ambitions. Alibaba will capture a lot of those workloads and its Qwen open source LLM is popular. During Nvidia’s second quarter earnings call, CEO Jensen Huang said China is critical to the AI market.

“About 50% of the world's AI researchers are in China. The vast majority of the leading open source models are created in China. And so it's fairly important, I think, for the American technology companies to be able to address that market,” said Huang. “And open source, as you know, is created in one country, but it's used all over the world. The open source models have come out of China."

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Eddie Wu said Alibaba's cloud demand is driven by external customers with AI workloads. "We remain committed to investing in our two strategic pillars of consumption and AI + Cloud to capture historic opportunities and drive long-term growth," said Wu.

According to Alibaba, AI-related product revenue delivered triple-digit revenue growth for the eighth consecutive quarter. AI demand is also driving increased demand for Alibaba's compute and storage services to support AI adoption.

The company noted that it will continue to invest in its cloud unit to meet demand.

Alibaba, including its e-commerce operations, reported first quarter net income of $6.02 billion on revenue of $34.57 billion.

Dell Technologies delivers strong Q2 as AI system demand surges

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Dell Technologies said demand for AI servers and systems remains strong, but the PC business is showing some weakness.

The company reported second quarter earnings of $1.70 a share on revenue of $29.8 billion, up 19% from a year ago. Non-GAAP earnings for the second quarter came in at $2.32 a share.

Wall Street was expecting Dell to report second quarter earnings of $2.29 a share on revenue of $29.19 billion.

The story for Dell remains the same: Strong demand for AI systems and adjacent hardware.

Jeff Clarke, chief operating officer of Dell, said the company shipped $10 billion in AI systems in the first half of fiscal 2026 and topped all shipments in fiscal 2025. Clarke said "demand for our AI solutions continues to be exceptional, and we’re raising our AI server shipment guidance for FY26 to $20 billion dollars."

Dell delivered record revenue in servers and networking. The company's infrastructure solutions group (ISG) delivered revenue of $16.8 billion, up 44% from a year ago. Server and networking revenue was $12.9 billion, up 69%. Operating income for ISG was $1.5 billion.

The PC business for Dell remains an issue. Dell's client solutions group revenue in the second quarter was $12.5 billion, up 1% from a year ago. Commercial revenue was up 2% and consumer revenue was down 7%. Operating income was $803 million.

As for Dell's outlook, the company projected third quarter revenue of $26.5 billion and $27.5 billion, up 11% from a year ago, with non-GAAP earnings of $2.45 a share. Fiscal 2026 revenue is expected to be between $105 billion and $109 billion, up 12% from a year ago at the midpoint. Non-GAAP earnings for the fiscal year is expected to be $9.55 a share.

In prepared remarks, Clarke noted the following:

• "We booked $5.6 billion in orders in the second quarter and shipped a record $8.2 billion, resulting in an ending backlog of $11.7 billion."
• "Our five quarter pipeline continued to grow sequentially, with double digit growth across enterprise and sovereign opportunities."
• "We are seeing strong Enterprise interest in our new Nvidia RTX Pro 6000 AI Factory solutions."
• "We expect moderate growth as the PC refresh continues, driven by an aging installed base and the Windows 10 end-of-life, which is now 48 days away. To fully seize the refresh opportunity, we’ve taken steps to improve execution and expand our PC TAM."

Constellation Research analyst Holger Mueller said:

"If an enterprise needs to run on premises, it's really down to two options with Dell and HPE. Those two are slowly but steadily outgrowing other competitors. AI is also the big sales point for Dell for on-premises servers, not surprisingly its strongest segment. Growing AI systems revenue from zero in the first half of 2024 to a projected $20 billion in fiscal 2026 is an accomplishment. It is clear that Dell customers are replacing traditional servers with AI servers."

Broadcom pitches VMware Cloud Foundation 9 as the future, but rivals eye disgruntled customers

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Broadcom CEO Hock Tan said enterprises can bet on VMware's platform for on-premises AI workloads as well as private cloud. But the competition is only going to increase as rivals aim to poach VMware customers.

Tan's talk landed as VMware held its Explore conference. Given Broadcom's business is being driven by custom AI processors it's easy to overlook the VMware acquisition. Despite intense competition from Microsoft, HPE, hyperscalers and Nutanix to name a few, Broadcom has delivered on what it said it would do with VMware.

Broadcom's plan was to simplify pricing, focus on VMware Cloud Foundation (VCF) and large enterprises.

Tan said:

"Most of you continue to be weighed down by your legacy infrastructure, and you're afraid to move forward. How do you let go of your IT path so you can build for the future?

Well, I can tell you for sure, the answer is not to run straight to public cloud as you did 5, 10 years ago. If you're going to do cloud, do it right, embrace VCF 9.0 and stay on-prem. That VCF 9.0 is the culmination of 25 years of VMware technology and innovation. And this is the platform for the future."

At VMware Explore, the company announced the following:

• The company said Walmart selected Broadcom's VMware as a strategic vendor for virtualization software. VMware Cloud Foundation (VCF) will be the platform that unifies Walmart's distributed operations.
• Broadcom said VCF will get VMware Private AI Services as a standard component in VCF 9.0, which is generally available. VMware argued that VCF is futureproof for AI workloads. Model Context Protocol (MCP) support, runtimes for multiple AI accelerators from Nvidia and AMD, and multiple models will be added to VCF.
• VCF has new services for cybersecurity including continuous compliance enforcement, automated cyber and data recovery and incident response tools.
• A partnership with Nvidia to integrated the GPU giant's latest technologies into VCF.
• An expanded alliance with Canonical to ship container-based AI applications faster. VCF and Ubuntu Pro will be available with enterprise support.

It remains to see if Tan's wooing of enterprises will pay off. It does appear that VMware has battled back vs. the competition either by favorable pricing or technology roadmap. Tan's biggest argument is that Broadcom has delivered on its promises.

"Since the acquisition two years ago, we rolled up our sleeves, did the tough engineering work and the result today is VMware Cloud Foundation 9.0, a real software-defined platform to run all your application workloads with compute, networking and storage tightly integrated," he said. "We deliver VCF as a single SKU. We made it plug and play. And with VCF 9.0, just want you to know, private cloud now outperforms public cloud."

The Explore keynote also featured a heavy dose of customers including Barclays and Grinnell Mutual that modernized on VCF. "With VCF, it's really allowing my small team to extract maximum value from a really cohesive set of tools. And that unifying software, it extends to that pain point that exists between infrastructure and developers," said Jeremy Wright, Director of IT Infrastructure, Grinnell Mutual.

Not so fast, say rivals

Tan's argument that VCF 9.0 is your future isn't going to give pause to rivals. Just ahead of the Explore keynote, Microsoft launched a VM Conversion tool that makes it easy to convert VMware to Windows Server and Hyper-V.

Before that Microsoft announcement, Platform9 launched a tool to migrate entire VMware vSphere clusters.

In May, AWS launched AWS Transform for VMware all designed to migrate VMware customers. Now generally available, AWS Transform for VMware is just getting traction.

And Nutanix's second quarter earnings call featured its usual batch of VMware questions. CEO Rajiv Ramaswami said Nutanix is taking workloads from VMware, but it's a long game. He said:

"I think the vast majority of the opportunity is still in front of us. And if you were to characterize this as a multi- inning baseball game, I'd probably say we're in the second inning at this point. The fact we've added 2,700 customers over the last year is a good sign that there are people moving. But there's 200,000 customers out there for VMware.

It's going to take time. And for the bigger customers, it's going to take even longer. The real big ones out there will take a long time to migrate. The smaller you are, the faster it is to migrate. The longer you are -- the bigger you are, the longer it's going to take."

Snowflake Q2 earnings strong with revenue growth of 32%

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Snowflake delivered strong second quarter earnings as its AI Data Cloud gains traction.

The company reported a GAAP second quarter net loss of $298 million, or 89 cents a share, on revenue of $1.144 billion, up 32% from a year ago. Snowflake reported second quarter non-GAAP earnings of 35 cents a share.

Wall Street was expecting Snowflake to report second quarter non-GAAP earnings of 27 cents a share on revenue of $1.09 billion.

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Snowflake said it has 654 customers with trailing 12-month product revenue greater than $1 million. Product revenue in the second quarter was $1.09 billion.

Sridhar Ramaswamy, CEO of Snowflake, said the company is executing well and “thousands of customers are betting their business on Snowflake and more than 6,100 accounts are using Snowflake’s AI every week.“

Nevertheless, Snowflake is valued at about $65 billion by the public markets compared to Databricks' $100 billion private market valuation. 

As for the outlook, Snowflake projected product revenue in the third quarter of $1.125 billion and $1.13 billion, up 25% to 26%. Operating income margin will be 9% on a non-GAAP basis.

For fiscal 2026, Snowflake projected product revenue of $4.395 billion, up 27% from a year ago.

On an earnings call, Snowflake cited BlackRock, Cambia Medicare, Thomson Reuters and Duck Creek Technologies as customers.

Ramaswamy said the following on the earnings call:

• "In the first half of the year alone, we launched approximately 250 capabilities to general availability, demonstrating both the pace of our innovation and the breadth of our platform expansion. But we aren't stopping there. As we innovate, we are continuing to strengthen our platform and help our customers do more with their data to deliver great business outcomes."
• "We are continuing to see strong adoption of open data formats, especially truly open modern table formats like Apache Iceberg. We now have over 1,200 accounts using Iceberg."
• "There is more and more recognition that the AI components of our data platform can deliver enormous value. And we are seeing budgets get allocated from large customers for AI projects."
• "I think there is honestly years of work ahead in terms of the value that we can get from AI. The models have advanced so much that I think just effectively using them in all of the workflows that matter to enterprises is going to create enormous value for all of us."

Nvidia delivers strong Q2, rides data center demand, but China a wild card

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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Nvidia reported better-than-expected second quarter results and said revenue for the third quarter will be about $54 billion. Nvidia recorded no sales of its H20 processors in China in the second quarter and doesn’t assume any shipments in the third quarter.

The AI chip giant reported second quarter earnings of $26.42 billion, or $1.08 a share, on revenue of $46.74 billion, up 56% from a year ago and up 6% sequentially. Non-GAAP earnings were $1.05 a share.

Wall Street was expecting Nvidia to report second quarter non-GAAP earnings of $1.01 a share on revenue of $46.13 billion.

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Simply put, there is a lot of noise around Nvidia results given China sales, US government headlines and talk of an AI bubble.

Key takeaways:

• Nvidia released $180 million or previously reserved H20 inventory from $650 million unrestricted H20 sales to a customer outside of China.
• CEO Jensen Huang said, “production of Blackwell Ultra is ramping at full speed, and demand is extraordinary.”
• The company approved an additional $60 billion in its stock repurchase program.
• Data center revenue was $41.1 billion, up 56% from a year ago.
• Second quarter gaming revenue was $4.3 billion, up 49% from a year ago.
• Professional visualization revenue as $601 million, up 32% from a year ago.
• Automotive and robotics revenue was $586 million, up 69% from a year ago.
• Networking revenue was $7.3 billion, up 98% from a year ago.
• Hyperscale cloud providers drove 50% of data center revenue. 
• Data center revenue was a bit lighter than estimates.
• Inventory was $15.0 billion, up from $11.3 billion sequentially, to support the ramp of Blackwell Ultra.

As for the outlook, Nvidia projected third quarter revenue of $54 billion with non-GAAP gross margins of 73.3% to 73.5%.

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CFO Colette Kress said in prepared remarks.

Data center growth was “driven by demand for our accelerated computing platform used for large language models, recommendation engines, and generative and agentic AI applications. We continue to ramp our Blackwell architecture, which grew 17% sequentially, including our newest architecture, Blackwell Ultra.”

Constellation Research analyst Holger Mueller said:

"Nothing seems to be able to slow down Nvidia, which reported record revenue in each of their segments, with 'very little brother' gaming topping $4 billion in revenue. Closer to the data center, networking revenue practically doubled, and is now 1/7th of data center revenue. Headwinds are not foreseeable for the short term future - as Nvidia braved the China/H20 challenge. Things keep looking up for Nvidia." 

On a conference call, Kress said:

• "The transition to the GB300 has been seamless for major cloud service providers due to its shared architecture, software and physical footprint with the GB200 enabling them to build and deploy GB300 racks with ease."
• "Factory builds in late July and early August were successfully converted to support the GB300 ramp, and today, full production is underway. The current run rate is back at full speed, producing approximately 1,000 racks per week."
• "Rubin remains on schedule for volume production next year."
• "We have not included H20 in our Q3 outlook as we continue to work through geopolitical issues. If geopolitical issues recede, we should ship $2 billion to $5 billion in H20 revenue in Q3 and if we had more orders, we can build more."
• "The market for AI inference is expanding rapidly with reasoning and agentic AI, gaining traction across industries."
• "We are on track to achieve over $20 billion in sovereign AI revenue this year, more than double than that of last year."

Huang's mission on the conference call was to allay concerns that the easy money has been made. He said the following:

• "The amount of computation that is that has resulted in agentic AI has grown tremendously. And of course, the effectiveness has also grown tremendously because of agentic AI."
• "Enterprises have been opened up as a result of agentic AI and vision language models. We now are seeing a breakthrough in physical AI, in robotics, autonomous systems. So the last year, AI has made tremendous progress and agentic systems, reasoning systems, is completely revolutionary."
• "The last couple of years, you have seen that capex has grown in just the top four CSPs by has doubled and grown to about $600 billion so we're in the beginning of this build out."
• "We're in every cloud for a good reason. Not only are we the most energy efficient, our perf per watt is the best of any computing platform, and in a world of power limited data centers, perf per watt drives directly to revenues."
• "About 50% of the world's AI researchers are in China. The vast majority of the leading open source models are created in China. And so it's fairly important, I think, for the American technology companies to be able to address that market. And open source, as you know, is created in one country, but it's used all over the world. The open source models have come out of China."

CrowdStrike acquires Onum, reports strong Q2

Larry Dignan

Editor in Chief of Constellation Insights
Constellation Research

Larry Dignan is Editor in Chief of Constellation Insights at Constellation Research, where he leads editorial coverage focused on enterprise technology, digital transformation, and emerging trends shaping the future of business. He oversees research-driven news, analysis, interviews, and event coverage designed to help technology buyers and vendors navigate complex markets with clarity and context. ...

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CrowdStrike said it will acquire Onum, a company that specializes in real-time telemetry data pipelines, in a move that will bring more data into the cybersecurity vendor’s platform.

CEO George Kurtz said Onum “is both a pipeline and a filter, which will stream high-quality, filtered data directly into the platform to drive autonomous cybersecurity at scale.” Onum data will be folded into CrowdStrike’s Falcon Next-Gen SIEM.

The company also reported second quarter results. CrowdStrike reported a second quarter net loss of $77.7 million, or 31 cents per share, on revenue of $1.17 billion, up 21% from a year ago. Non-GAAP earnings in the quarter checked in at 93 cents a share.

Wall Street was looking for second quarter non-GAAP earnings of 83 cents a share on revenue of $1.15 billion.

CrowdStrike’s quarter landed following a strong outlook from Palo Alto Networks, which also recently said it would acquire CyberArk for $25 billion.

As for the outlook, CrowdStrike projected third quarter revenue between $1.208 billion and $1.218 billion with non-GAAP earnings of 93 cents a share to 95 cents a share. For fiscal 2026, CrowdStrike is projecting revenue between $4.75 billion and $4.8 billion with non-GAAP earnings of $3.60 a share to $3.72 a share.

CrowdStrike CEO George Kurtz on a conference call said AI is complicating the cybersecurity landscape even as it leads to opportunities.

Kurtz said:

"In cybersecurity as well as the broader technology market, AI's impact is palpable. As organizations of all sizes embrace AI transformation, I hear several thematic concerns from executives and Boards. One, where is shadow AI emerging in my business? Two, how do I control what data enters AI systems? Three, how do I control what AI systems can do in my enterprise? Which ultimately leads to the focal question of four, how do I secure AI agents? AI has made the role of CISOs and CIOs more complicated than ever.

CrowdStrike's role in the agentic era is staying ahead of AI-armed threat actors to secure AI at every layer. Beginning with the AI model itself to the workloads and hosts on which they run to the actual human and agentic identities, to the end-user devices accessing these systems and applications."

Kurtz also outlined the reasoning behind the Onum purchase and the company's goal to use it to secure every stage of the AI life cycle.

"Onum will bring Falcon's AI-powered detections closer to third-party data sources in pipeline, starting analysis before data even enters the Falcon platform. Here's why Onum stood out to us. One, speed. Onum delivers 5x more events per second than its nearest competitor and processes data in real-time versus legacy batch and store methods. Two cost. Onum's smart filtering reduces data storage costs by 50%. Three, superior outcomes. Onum's real-time pipeline detection starts before data enters the Falcon platform, delivering up to 70% faster incident response with 40% less ingestion overhead."

Other takeaways from Kurtz:

• The company had more than 1,000 Falcon Flex customers with the average Flex customer representing more than $1 million of annual recurring revenue.
• "I think a big part of it is going to be the AI story of understanding how all these interdependencies work in the build environments, in code and obviously, in sort of these interactions with MCP-type services. So this is something that we continue to invest in this area."
• "Customers are in the early journey of how they leverage AI. And it's moving from, hey, this is really a cool technology to how do we implement it and implement it securely and do it in a way that actually accrues value back to the business. If we believe in AI, and we think there's going to be more AI in the future, in the next year, 3 or 5 years, then security is a necessity. You're not going to have more AI without security."