#𝐍𝐕𝐈𝐃𝐈𝐀𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬

NVIDIA Earnings: The AI Boom Just Raised the Bar Again

NVIDIA’s August 26 earnings report has delivered one of the strongest signals yet that the global AI infrastructure cycle is still accelerating. For the fiscal second quarter ended July 26, NVIDIA generated a record $96.2 billion in revenue, representing 18% sequential growth and 106% year-over-year growth. Data Center remained the dominant engine, reaching an extraordinary $89.0 billion, up 18% from the previous quarter and 117% year over year. Gross margins remained at 75.0% on both GAAP and non-GAAP measures, while diluted EPS came in at $2.46 GAAP and $2.22 non-GAAP, both ahead of Wall Street expectations.

But the most important part of the report was not the quarter that just ended. It was NVIDIA’s outlook for what comes next. Management guided fiscal Q3 revenue to approximately $108 billion, plus or minus 2%, while expecting gross margin around 74.0%. The remarkable detail is that this guidance assumes zero data-center compute revenue from China. In other words, NVIDIA’s next growth target is being built around demand outside China, reducing the extent to which current export restrictions can affect the headline growth trajectory.

The longer-term outlook makes the story even more aggressive. Management expects revenue growth of approximately 70% in fiscal 2028, compared with a consensus expectation of around 44%. CEO Jensen Huang said demand is substantially greater than that growth rate and indicated that supply, rather than customer appetite, remains the primary limitation. CFO Colette Kress also said NVIDIA could exceed its $500 billion cumulative revenue target for Blackwell and Rubin products, supported by expanding orders from hyperscalers, AI laboratories, enterprises and sovereign customers.

The scale of NVIDIA’s Data Center business puts the numbers into perspective. The company added approximately $13.8 billion in Data Center revenue in just one quarter. That increase alone is more than twice AMD’s reported $6.7 billion quarterly Data Center business, highlighting the enormous gap NVIDIA continues to maintain in AI computing infrastructure.

China is becoming a smaller part of that equation as well. NVIDIA disclosed that less than 1% of Data Center revenue came from China, primarily involving Hopper 200 products sold under U.S. licensing arrangements. That suggests the company’s current growth engine has become increasingly diversified geographically, even as semiconductor export restrictions remain an important risk factor.

Then came the stock-market reaction — and this time it was different. NVIDIA shares had declined in eight of the nine sessions leading into the earnings report, reinforcing the familiar market pattern in which even strong NVIDIA results could be followed by profit-taking. Instead, shares surged 8.7% on August 27, marking the company’s largest single-day gain since April 2025. The move helped lift the Nasdaq Composite 1.6% and the S&P 500 0.7%.

However, the market did not maintain that enthusiasm for long. On August 28, NVDA dropped 4.6% to $217.55 as investors refocused on interest rates and valuation. The decline erased roughly $250 billion of the post-earnings market-capitalization gain, leaving the stock slightly below its pre-earnings level. This reaction is important because it shows that exceptional fundamentals do not eliminate valuation and macro risks.

There is also substantial infrastructure spending behind NVIDIA’s demand outlook. NVIDIA and Amazon Web Services plan to deploy an additional 2 million NVIDIA GPUs across AWS infrastructure during 2027–2028, including 100,000 GPUs for U.S. government workloads on secure AWS infrastructure. Meanwhile, NVIDIA’s neocloud partners are expected to finish the year with approximately 8 gigawatts of installed capacity, equivalent to the power consumption of roughly 6 million households.

Capital returns remain another supporting factor. NVIDIA ended the quarter with approximately $99 billion remaining under its share-repurchase authorization and continues to pay a $0.25 quarterly dividend, with the next payment scheduled for October 1.

So what should investors focus on after this earnings report?

The key issue is no longer simply whether NVIDIA can beat quarterly estimates. The company has already demonstrated that it can deliver extraordinary numbers. The bigger question is whether Blackwell and Rubin demand, hyperscaler spending, AI infrastructure expansion and margins can remain strong enough to justify the market’s increasingly ambitious expectations.

The bullish argument is straightforward: record Data Center revenue, accelerating AI infrastructure demand, powerful Blackwell momentum, an aggressive Q3 guide and a much stronger long-term growth outlook suggest that the AI investment cycle still has significant runway.

The bear argument is equally important: NVIDIA’s expectations are already extremely high, gross margins are expected to moderate toward 74%, valuation remains sensitive to interest rates, and any slowdown in hyperscaler spending could trigger aggressive profit-taking after such a massive multi-year rally.

For me, the $108 billion Q3 revenue guide is the immediate checkpoint. If NVIDIA can continue delivering growth at this scale while maintaining strong margins and converting Blackwell and Rubin demand into sustained revenue, the AI infrastructure thesis remains powerful.

The bigger message from this earnings report is simple: AI demand is not showing signs of disappearing NVIDIA is saying supply is struggling to keep up with it. But with NVDA closing at $217.55 on August 28, the next phase will depend not only on exceptional earnings, but on whether future growth can continue exceeding the expectations already embedded in the stock.

NVIDIA has raised the standard once again. Now the market has to decide whether the company can keep clearing it. @Gate_Square