Nvidia shares rally 5% after stellar Q2; revenue guidance for 2028 tops analyst estimates

Nvidia shares jumped 5% in extended trading on Wednesday after the world’s most valuable company reported second-quarter fiscal 2027 results that beat analyst expectations. The stock received a further boost after management said revenue growth could reach about 70% in the next fiscal year, signalling continued strong demand for its AI chips.

Nvidia's revenue more than doubled from a year earlier to $96.22 billion, beating the $92.17 billion estimate. Earnings per share came in at $2.22, compared with analyst expectations of $2.10.

What has Nvidia guided for FY28?

Nvidia is betting that the artificial intelligence boom is far from over. The chipmaker on Wednesday forecast a 70% jump in revenue next fiscal year, pointing to continued demand for AI computing even as shortages of memory components threaten to constrain how quickly it can expand.


“AI has reached its inflection point. It's doing useful work. Its tokens are productive and profitable. Now, compute is revenue,” Nvidia Chief Executive Jensen Huang said.

However, the outlook could have been even stronger if not for supply constraints. Nvidia is grappling with shortages of components, particularly memory, as surging demand from AI data-centre buildouts puts further pressure on global supplies.

The forecast is likely to ease investor concerns over how long the AI spending surge can sustain its extraordinary pace after years of explosive growth.

Nvidia is projecting revenue growth well above Wall Street expectations while pointing to demand from the biggest technology companies as well as AI labs. The message is clear: the market for AI computing is still expanding rather than approaching a peak, even though supply constraints are limiting how much of that demand Nvidia can capture.

Based on the consensus projection of $396 billion in revenue for fiscal 2027, which ends in January, Nvidia's sales next year would reach $673 billion. That would put the chipmaker ahead of Apple and Alphabet, according to Wall Street projections, and behind only Amazon among U.S. tech companies.

The company said its position in the market is changing as demand for massive, multi-billion-dollar AI infrastructure projects spreads to a much wider range of customers. As AI becomes capable of doing useful work, Nvidia believes the spending that once came from a concentrated group of buyers is broadening.

Nvidia flags 2 risks

Nvidia margins to bottom in fiscal fourth quarter

Nvidia expects its gross margin to decline and bottom out in the fourth quarter of fiscal 2027, at 71% to 72%, with higher memory prices partly responsible for the pressure.

“Memory scarcity today is being driven in large part by the AI buildout itself,” Nvidia Chief Financial Officer Colette Kress said, adding that the company wanted to address the issue directly rather than leave it as an open question.

Nvidia flags indebtedness as standalone risk factor

For the first time, Nvidia’s quarterly filing on Wednesday identified indebtedness as a standalone risk factor, warning that rising obligations could “adversely affect” the company’s financial condition and cash flows.

As of July 26, Nvidia had $33.5 billion in senior notes outstanding, alongside a $25 billion commercial paper programme. Earlier this year, Nvidia said it could raise up to $25 billion through unsecured commercial paper notes, marking the chipmaker’s first bond sale since the start of the AI boom.

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