“Within this, we expect Q3 AI semiconductor revenue of $16 billion, up over 200% year on year.”

In context

“6% of revenue. We spent $231 million on capital expenditures. We ended the second quarter with $19.6 billion of cash compared to $14.2 billion in the prior quarter. We ended the second quarter with inventory $4.3 billion as we continue to secure supply to support strong AI demand. Our days of inventory on hand were 86 days in Q2, compared to 68 days in Q1 in anticipation of accelerating AI semiconductor growth in the second half of the year. Turning to capital allocation. In Q2, we paid stockholders $3.1 billion of cash dividends based on a quarterly common stock cash dividend of $0.65 per share. Now moving to guidance. Our guidance for Q3 for consolidated revenue of $29.4 billion, up 84% year on year. We forecast semiconductor revenue of approximately $20.5 billion, up 124% year on year. Within this, we expect Q3 AI semiconductor revenue of $16 billion, up over 200% year on year. We expect Q3 infrastructure software revenue of approximately $8.9 billion, up 31% year on year. Moving on to margins. As the proportion of AI revenue significantly grows in Q3, we expect Q3 consolidated gross margin to be down to approximately 74%. This decline in gross margin does not represent a structural change in semiconductor margin. Rather, it reflects product mix between semiconductors and infrastructure software. Regardless of the impact to gross margin, we expect Q3 operating margin to be 67% which is flat quarter on quarter, demonstrating our strong operating leverage. We highly recommend that investors model semiconductor and infrastructure software margins separately to properly reflect the impact of changes in total revenue mix going forward. We expect the non GAAP tax rate”