Nvidia Q2 FY2027 earnings: AI boom rolls on, but new questions emerge

Nvidia posted record second-quarter fiscal 2027 revenue of $96.2 billion, beating Wall Street expectations and more than doubling revenue from a year earlier. The results underscored continued strength in AI infrastructure spending. (Sources: CNBC, Yahoo Finance, Nvidia)

Nvidia's Q2 revenue came in at $96.2 billion, against analyst expectations of around $92.3 billion. Adjusted earnings per share stood at $2.22, ahead of the $2.09 expected by Wall Street.

The company's Data Centre business generated approximately $89 billion in quarterly revenue, up 117% from a year earlier. The segment continues to benefit from massive spending by hyperscalers and AI infrastructure providers.

Nvidia expects third-quarter revenue of roughly $105.8 billion to $110.1 billion, significantly above Wall Street's expectations. The company is forecasting another major step-up in sales as demand for AI computing continues to accelerate.

Nvidia's results show that spending on AI chips and data-centre infrastructure remains robust despite growing debate over whether AI investments can generate sufficient returns. The company said demand continues to outpace its ability to supply customers, highlighting the scale of the current AI infrastructure buildout.

Nvidia's expanding investments and partnerships with AI companies and data-centre projects have raised questions about circular financing—whether Nvidia is effectively helping finance customers that then use the money to buy Nvidia products. Yahoo Finance reported that CFO Colette Kress rejected that characterisation, arguing that Nvidia's investments are strategic and aimed at expanding the AI ecosystem.

Nvidia has been working with major financial institutions to mobilise as much as $500 billion in third-party capital for AI infrastructure. The initiative has attracted investor scrutiny because of the scale of Nvidia's financial involvement in the ecosystem.

Despite explosive revenue growth, Nvidia faces rising costs, particularly for memory components. The company expects gross margins to face pressure as memory costs rise, creating a potential counterweight to its strong revenue outlook.

Nvidia shares initially fell after the earnings release despite the strong beat, reflecting the extremely high expectations already embedded in the stock. The shares later recovered and were reported to be more than 4% higher in after-hours trading in some market updates.

Nvidia's latest results reinforce the strength of the AI spending cycle, with revenue growth still running at extraordinary levels. However, investors are increasingly looking beyond headline earnings to AI investment returns, financing structures, margins, supply constraints and competition from customers developing their own chips. Nvidia's ability to sustain growth while addressing these concerns could determine the next phase of its stock performance.