Nvidia reports stronger-than-expected results, projects 70% revenue growth by 2571, and shares jump 4% on positive AI demand.

Nvidia's Q2 revenue reached $9.62 billion, exceeding expectations, and signaled 70% growth by 2571, surpassing market forecasts of 44% driven by strong demand for AI chips. Meanwhile, Amazon is preparing to purchase 2 million GPUs.

On August 27, 2569, at 06.42:2 AM, CNBC reported that Nvidia reported stronger-than-expected second-quarter fiscal 2027 earnings, both in revenue and profit, exceeding Wall Street's forecasts. The company also projected higher revenue growth of 70% in fiscal 2028, significantly higher than the 44% predicted by analysts. Following the earnings announcement, Nvidia stock rose approximately 4%.

Nvidia's latest quarterly earnings, compared to analyst estimates from LSEG, are as follows:

• Adjusted earnings per share (EPS) were $2.22, higher than the expected $2.10.
• Revenue was $9.622 billion, exceeding the expected $9.217 billion.

Nvidia's revenue more than doubled from $4.67 billion in the same period last year, reflecting the continued strong demand for artificial intelligence (AI) chips, even nearly four years after OpenAI launched ChatGPT, a key starting point for the generative AI trend.

The company's net profit more than doubled to $5.395 billion, or $2.22 per share, from $2.476 billion, or $1.87 per share, in the same period of the previous year.

One of the most surprising developments to the market was the business outlook for fiscal year 2028. Colette Kress, Nvidia's Chief Financial Officer, stated during a meeting with analysts that the company expects revenue growth of approximately 70%, while the market had estimated only 44%.

Cress stated that customer estimates reflect that Nvidia's growth could double next year, but the company's outlook also takes into account supply constraints.

For the current quarter, Nvidia expects revenue of approximately $1.08 billion, plus or minus 2%, higher than analysts' estimates of $1.042 billion. This estimate excludes revenue from its data center business in China.

Nvidia's data center business remains its core driver, generating $89 billion in revenue, exceeding StreetAccount's forecast of $8.633 billion and representing a 117% increase from the previous year.

Currently, the data center business accounts for approximately 92% of Nvidia's total revenue, while the company's overall revenue has increased by 106% compared to the same period last year.

However, growth didn't come solely from large tech companies or hyperscalers. The AI ​​Cloud, Industrial, and Enterprise (ACIE) customer segment generated $4.03 billion in revenue, a 138% increase from the previous year, while revenue from hyperscalers more than doubled to $4.87 billion.

Jensen Huang, CEO of Nvidia, stated that the AI ​​industry has reached a turning point. Compared to the same period last year, most AI infrastructure investment was driven by a single large AI lab. However, now a large number of AI labs, startups, and developers of frontier models and physical AI are simultaneously investing rapidly worldwide.

Another significant boost comes from Amazon Web Services (AWS), which is preparing to purchase 2 million Nvidia GPUs and will utilize Nvidia's new "Vera" CPU.

Huang further revealed that in addition to 2 million GPUs, Amazon can also purchase millions of CPUs and utilize Nvidia technology in its robotics business.

The deal reflects hyperscalers' continued investment in AI, even as investors begin to worry that spending may be nearing its peak. Nvidia expects the capital expenditures (Capex) of the five largest hyperscalers to increase from approximately $800 billion in 2026 to $1.3 trillion next year.

Nvidia has also expanded its role from a chip vendor to a major investor in the AI ​​ecosystem. Previously, the company acquired a $3 billion stake in OpenAI and has invested in other technology companies such as Intel and SpaceX.

During an earnings call, Huang stated that investing in leading AI companies is a “once-in-a-century opportunity,” adding that the only thing he regrets is not investing more and sooner.

Huang also believes that OpenAI and Anthropic are likely to be listed on the stock market in the near future, and other AI companies may follow suit.

In the most recent quarter, Nvidia recorded approximately $7.8 billion in equity investment gains, following a first-quarter gain of $1.59 billion.

Despite continued strong revenue growth, Nvidia is facing pressure from rising memory prices amid a global memory shortage partly a result of rapidly increasing investment in AI infrastructure.

Nvidia's gross margin stood at 75% for the second consecutive quarter, but the company expects it to decline to 74% in the current quarter and potentially hit a low of around 71–72% in fiscal year 2027.

Kress stated that the current memory shortage is driven largely by the accelerated construction of AI infrastructure.

Higher demand for components has also led Nvidia to significantly increase its supply commitments, rising from $1.19 billion in the previous quarter to $2.79 billion in the most recent quarter, largely related to memory procurement.

Although the US government allowed Nvidia to resume selling some types of older chips to China late last year, revenue from the Chinese market remains low.

Kress stated that exports of such chips account for less than 1% of data center revenue, and there is uncertainty about the level of importation allowed by the Chinese government.

Meanwhile, Nvidia stated in its quarterly report that indebtedness is a separate risk factor, warning that increased financial burden could impact its financial position and future cash flow.

As of July 26, the company had outstanding unsecured bonds of $3.35 billion and a Commercial Paper program worth $2.5 billion.

Of that amount, approximately $1.5 billion in debt is due within the next 1–5 years, a significant increase from the $2.75 billion reported in the previous quarter.

The increased debt burden comes at a time when Nvidia is playing a more significant role in funding data center construction and AI infrastructure. Huang recently announced a partnership with six leading financial firms, pledging up to $500 billion in investor funding for AI infrastructure.

Despite continuing investment and increasing supply chain commitments, Nvidia continues to return a high level of returns to shareholders, with the company spending a total of $26 billion on share repurchases and dividend payments in the past quarter, after approving an additional $8 billion share repurchase program in May.

Recent earnings reinforce that Nvidia remains one of the biggest beneficiaries of global AI investments, especially as demand for chips is no longer limited to hyperscalers. However, investors must also watch for risks from soaring memory costs, expanding debt, massive investments from major customers, and competition from AMD, Google, and other AI chip developers, which could become a crucial test for Nvidia's ability to maintain high growth rates in the future.

Reference: cnbc.com

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