First up, from Barron's Adam Levine who is obviously not a member of the NVDA obsessive-compulsive club, August 26:
These Two Sentences May Have Just Fixed Nvidia’s Stock
As usual, the Nvidia earnings call was a discursive affair, touching on many different subjects. But the only thing that mattered in the end came right near the beginning of the call.
The stock was down after the earnings release showed that Nvidia's vaunted 75% gross margin would slip a bit in the second half of the year due to spiraling memory chip costs That outlook overshadowed another stellar second quarter. The stock was roughly flat as the call began at 5 p.m. ET.
But moments later Chief Financial Officer Colette Kress said the magic words: "We expect to grow revenue by approximately 70% in fiscal 2028. This is a supply-constrained outlook." Nvidia shares instantly surged 4%.
Fiscal 2028 begins in late January, so it encompasses 11 months of calendar 2027. Wall Street was expecting 45% growth next year, a big slowdown from what looks to be a doubling of sales this year.
Later in the call, CEO Jensen Huang said that were the company not supply-constrained, sales would double again next year, and that the company was working on opening up some of the bottlenecks holding them back.
There was another hour of talking on the call, but none of it mattered as much as those two sentences spoken by Kress.
And for those of us who are obsessive about the company and its stock, Investing.com has the fix, August 26:
NVIDIA said fiscal second-quarter revenue more than doubled from a year earlier to $96.2 billion and adjusted earnings topped Wall Street expectations, underscoring how the company remains at the center of the global AI spending boom. The chip maker reported adjusted earnings of $2.22 a share, above the $2.08 forecast, and said revenue exceeded the $91.9 billion consensus. Shares rose 3.98% after hours to $218, after closing the regular session at $209.66, down 1.59%.
Key Takeaways
- Revenue rose to a record $96.2 billion, more than doubling from a year earlier.
- Adjusted EPS of $2.22 beat expectations by 6.73%.
- Data center revenue reached $89 billion, or 92.7% of total sales.
- NVIDIA said demand is broadening beyond hyperscalers to sovereign AI, NeoClouds and enterprises.
- The company guided for $108 billion in revenue in the current quarter, above the latest consensus.
Company Performance
NVIDIA’s latest quarter showed that the AI infrastructure build-out remains in full force. Revenue growth accelerated for a fourth straight quarter, driven mainly by data center demand. The company said data center sales rose 18% from the previous quarter to $89 billion, with hyperscale revenue at $49 billion and its ACIE business — which includes sovereign AI, regional cloud providers and enterprises — at $40 billion.
The results reinforce NVIDIA’s position as the dominant supplier of AI computing systems. Management said the company’s architecture now supports the full AI life cycle, from data preparation and training to post-training and agentic inference. That broadening use case has helped NVIDIA expand beyond the original wave of large cloud customers into a wider customer base.
Gross margin remained 75%, but management warned that margins are likely to come under pressure in the near term because of memory pricing. Even so, the company said demand remains stronger than supply and that its products are fully utilized across every cloud it serves.
Financial Highlights
- Revenue: $96.2 billion, more than double year over year.
- Adjusted EPS: $2.22, up from a forecast of $2.08.
- Data center revenue: $89 billion, up 18% sequentially.
- Hyperscale revenue: $49 billion, up 13% sequentially.
- ACIE revenue: $40 billion, up 25% sequentially and 138% year over year.
- Gross margin: 75%, unchanged from the prior quarter.
- Return on equity: 114%, reflecting exceptional profitability.
- Market capitalization: $5.08 trillion, maintaining its position as one of the world’s most valuable companies.
- Operating expenses: up 10% on a GAAP basis and 11% on a non-GAAP basis sequentially.
- Inventory: $32 billion, higher as the company prepares for the Vera Rubin launch.
- Days sales outstanding: 60 days, reflecting longer payment terms for large investment-grade customers.
- Shareholder returns: $26 billion, including $20 billion in buybacks and $6 billion in dividends.
Earnings vs. Forecast
NVIDIA beat expectations on both earnings and revenue. Adjusted EPS of $2.22 came in $0.14 above the $2.08 forecast, a surprise of 6.73%. Revenue of $96.2 billion beat the $91.9 billion estimate by $4.3 billion, or 4.68%.
The size of the beat was solid, though not unusual for NVIDIA in the current AI cycle. Investors have come to expect strong outperformance from the company, so the market reaction likely reflected not only the beat itself but also the strength of the outlook and the continued scale of demand. The revenue beat was larger in dollar terms than the EPS surprise, which suggests that sales momentum remains the main story.
Market Reaction
The stock moved higher in after-hours trading, rising 3.98% to $218, or $8.34 above the regular-session close. The shares had finished the day at $209.66, down 1.59% from the previous close of $213.05, so the post-earnings move reversed part of that decline.
At $218, the stock traded near the upper end of its 52-week range of $164.07 to $236.54. The reaction was positive, but not extreme, which may reflect the market’s view that NVIDIA’s results were strong but broadly in line with the company’s powerful recent run. No unusual trading volume data was provided.
Outlook & Guidance
NVIDIA said it expects fiscal third-quarter revenue of $108 billion, plus or minus 2%, which implies a range of about $106 billion to $110 billion. The company also guided for gross margins of 74%, plus or minus 50 basis points, and operating expenses of $9.2 billion on a GAAP basis and $9.0 billion on a non-GAAP basis.
Management said Vera Rubin shipments began in August and that the new platform is already seeing purchase orders from major hyperscalers, AI cloud providers and system makers. The company said Vera Rubin should account for about 20% of data center revenue in the current quarter.
Looking further ahead, NVIDIA said revenue growth in fiscal 2028 should be about 70%, though management stressed that demand would be higher if supply were not constrained. The company also said CPU revenue is expected to more than double in fiscal 2028. InvestingPro Tips highlight that 10 analysts have revised their earnings upwards for the upcoming period, reinforcing the bullish outlook. For investors seeking deeper insights, NVIDIA is one of 1,400+ US equities covered by comprehensive Pro Research Reports, which transform complex Wall Street data into clear, actionable intelligence through intuitive visuals and expert analysis.
Executive Commentary
Chief Executive Jensen Huang said the company is seeing a shift toward agentic AI, which he said requires far more computing power than human-driven use. “The amount of compute necessary for an agent versus a human using it is probably 15 to 100 times,” he said.
Huang also argued that NVIDIA’s advantage comes from offering a full-stack platform rather than just chips. “We are the only company in the world that creates and builds, offers an entire AI factory platform, a full stack system,” he said.
Chief Financial Officer Colette Kress said the company’s business is broadening across customer groups. “Non-hyperscaler growth, our ACIE segment spanning sovereign regional NeoClouds, enterprise edge, and air gap data centers will represent roughly half of our data center business,” she said.
Risks and Challenges
- Margin pressure: NVIDIA said memory scarcity is pushing costs higher and could weigh on gross margins in coming quarters.
- Supply limits: Management said demand exceeds supply, which means the company may not be able to capture all available demand immediately.
- China exposure: The company said it did not include China data center compute revenue in forward guidance because of geopolitical uncertainty.
- Heavy customer concentration: Hyperscalers remain a large share of the business, even as the customer mix broadens.
- Execution risk on new products: Vera Rubin is only beginning to ramp, and any delay could affect growth expectations.
Q&A
Analysts focused on three main issues: the sustainability of 70% growth, the scale of future demand from agentic AI, and the impact of open-source models and custom chips.
Questions also centered on supply-chain bottlenecks, especially memory, power and data-center capacity. Huang said the company has supply for 70% growth but that demand is much higher. He added that the entire supply chain is under strain and that NVIDIA is working closely with suppliers to add capacity.
Another theme was competition from custom chips developed by major AI labs. Huang said NVIDIA is not just selling chips, but a full platform that can run across clouds and workloads worldwide. He said the company expects to remain a long-term partner to those customers.
Analysts also asked about open-source models. Huang said both open and closed models are growing quickly and that nearly all open models run on NVIDIA’s platform. He said the rise of open models is not a threat, but another source of demand.
Full transcript - NVIDIA Corporation (NVDA) Q2 2027....
***boilerplate***
....Colette Kress, Executive Vice President and Chief Financial Officer, NVIDIA: Thanks, Toshiya. We delivered another outstanding quarter with record revenue, operating income, and EPS. Total revenue of $96 billion more than doubled year-over-year as growth accelerated for the fourth consecutive quarter. The surge in AI demand is driving a global infrastructure build-out, supported by an expanding and diverse set of growth opportunities, spanning hyperscalers, AI labs, AI natives, enterprises, and sovereign customers. We expect to grow revenue by approximately 70% in fiscal 2028. This is a supply-constrained outlook. Q2 data center revenue increased 18% quarter-over-quarter to $89 billion, with strong contributions from both sub-segments, hyperscale and ACIE, which includes our NeoCloud, industrial, and enterprise customers. Hyperscale revenue of $49 billion grew 13% sequentially, driven by sustained strength in Blackwell.
Reinforcing that more compute drives more revenue as new GPU capacity comes online, our hyperscale customers delivered strong financial results in the quarter, with accelerating revenue growth and expanding margins. With cloud industry backlog now greater than $2 trillion, CapEx by the top five hyperscalers is expected to reach nearly $800 billion in 2026 and $1.3 trillion in 2027. Today, we are delighted to announce an expansion of our partnership with AWS. Building on its already vast installed base of NVIDIA Compute, AWS is deploying an additional 2 million GPUs starting this quarter through the second quarter of fiscal 2029, along with Vera CPUs, some integrated with Rubin, others standalone. AWS will serve NVIDIA Nemotron family of open models on Amazon Bedrock and SageMaker. Amazon will also adopt our full physical AI stack, Omniverse, Cosmos, Isaac, and Jetson to power its fleet of warehouse robots.
ACIE revenue of $40 billion increased 25% sequentially and 138% year-over-year. Growth was driven by NeoCloud capacity additions to meet the rising demand from enterprises, AI startups, and sovereigns, as well as hyperscalers purchasing capacity to supplement their own build-outs. Using NVIDIA DSX reference designs, our NeoCloud partners are bringing capacity online faster and at lower token cost. They are expected to exit the year with 8 gigawatts in total installed capacity, up from approximately 3 gigawatts at the end of 2025. Incredibly, we are seeing demand acceleration even at our scale. Customers’ forecasts point to our growth doubling next year. However, as I mentioned earlier, we expect to grow approximately 70% as we are supply-constrained. NVIDIA Compute is fully utilized across every cloud we serve. The economic value it generates for our hyperscale, NeoCloud, and AI lab partners keeps rising.
Besides building the best AI computing technologies and the most capable supply chain, NVIDIA has three unique capabilities that are engines powering our growth. First, NVIDIA’s architecture runs every model, and we’re growing share as closed and open model adoption grow. Closed and open models alike, adoption is skyrocketing. NVIDIA runs the leading closed models, OpenAI, Anthropic, Groq, Meta, Gemini, and the leading open models, Thinking Machines Lab, Mistral AI, Qwen, Kimi, GLM, DeepSeek, MiniMax, and Nemotron. We’re great at small models and giant ones, large or video, auto, regressive or diffusion, in the cloud or in the edge. NVIDIA is great at training, great at inference, great at agentic workloads. One platform, fungible for every model and workload. Durable for the entire life cycle of AI. That combination of performance, fungibility, and durability is what makes NVIDIA the productive and financiable compute infrastructure.
Our second unique capability is our full stack AI factory platform that is expanding our share of the data center TAM. Since Hopper, our revenue opportunity has grown from roughly $18 billion per gigawatt to $25 billion with Blackwell, to $40 billion with Vera Rubin, which now spans Vera CPU, Rubin GPU, NVLink, InfiniBand or Ethernet, and Groq LPU, announced earlier this week. Our ability to extreme co-design across GPU, CPU, NVLink scale-up networking, scale-out networking, systems, algorithms, and software enables us to deliver X factor performance gain every generation. Vera Rubin exemplifies this, delivering 30x higher throughput per megawatt and 35x lower token cost relative to Grace Blackwell Ultra. We commenced production shipments of Vera Rubin earlier this month. Having already received purchase orders from every major hyperscaler, AI cloud, and system OEM, we expect Vera Rubin to mark the fastest product ramp in NVIDIA’s history.
Our networking business had another record quarter, with revenue growing 18% on a sequential basis. Spectrum-X Ethernet, which grew 2.6x on a year-over-year basis, is already helping us become the largest and fastest-growing network company in the world. Rising adoption of agentic AI is driving an acceleration in demand for data center CPUs. Our Grace CPU, introduced in 2021, has been a great success, with revenue on a trailing 12-month basis exceeding $5 billion. Today, we are in full production of our next generation Vera CPU. As a standalone product, Vera expands our TAM even further. Vera completes agentic tasks 1.8x faster on the spec benchmark and provides five times the bandwidth per watt than any other data center CPU.
We expect Vera to be deployed by every major hyperscaler, NeoCloud, AI lab, and system OEM, with shipments already underway to our lead partners, including Oracle Cloud Infrastructure, SpaceX AI, and starting this quarter, AWS. We continue to see demand for approximately $20 billion in total server CPUs. Based on our customer demand and improving supply outlook, our preliminary expectation is for CPU revenue to more than double in fiscal 2028, positioning us as one of the world’s leading server CPU suppliers. Since the announcement of our Groq partnership last year, we’ve been working to unite NVIDIA’s high throughput and Groq’s high interactivity architectures. At Hot Chips earlier this week, we announced that Groq 3 LPX, our first rack-scale LPU system, is in full production and already setting records, demonstrating nearly 4x the number of tokens per second against the next best alternative on our Artificial Analysis benchmark....
....MUCH MORE
In pre-market trade the stock is changing hands at $221.89 up $12.23 (+5.83%)
If interested Yahoo Finance has a truncated version of the call transcript.
