Nvidia forecasts 70 percent fiscal 2028 revenue growth and beats quarterly estimates
The chipmaker exceeded second-quarter earnings expectations and issued an unprecedented long-term growth forecast, signaling accelerating artificial intelligence demand despite rising memory costs.
Nvidia reported second-quarter fiscal 2027 revenue of $96.22 billion, a 106 percent increase from the prior year that surpassed analyst estimates of $92.165 billion. Adjusted earnings per share increased 128 percent to $2.46, beating consensus expectations of $2.10.
The most significant development was management’s decision to issue guidance for fiscal 2028, marking the first time the company has projected results a year in advance. Chief Executive Jensen Huang indicated the company expects fiscal 2028 revenue to grow 70 percent compared to the current fiscal year, far exceeding the 45 percent growth analysts had modeled.
Huang addressed the supply dynamics during the post-earnings conference call. "Even though our demand is much greater than 70%, our supply allows us to confidently deliver 70%," he said, noting ongoing efforts to expand production capacity with supply chain partners. Shares initially dipped following the earnings release before rallying more than 4 percent as executives clarified that any unmet demand stems from capacity limits rather than softening orders.
Profitability faced headwinds from surging memory prices, which compressed gross margins. The company reported a 75 percent gross margin for the quarter, a 250-basis-point year-over-year expansion but slightly below market expectations. Chief Financial Officer Colette Kress warned that memory costs will continue to rise, forecasting gross margins to decline to between 71 percent and 72 percent in the fourth quarter.
Nvidia also announced a major expansion of its partnership with Amazon Web Services. The cloud unit will deploy 2 million additional Nvidia graphics processing units over the next two fiscal years and integrate Vera central processing units. Furthermore, Amazon plans to adopt the physical AI software stack to power its warehouse robotics fleet.
To secure the necessary components and infrastructure for this demand, Nvidia disclosed approximately $530.5 billion in total financial commitments. This figure includes $279 billion primarily dedicated to procuring memory, alongside billions allocated for cloud agreements, data center leases, and a $105 billion financing agreement for an OpenAI data center project in Ohio.
Defending the massive capital deployment, Kress addressed concerns about the strategy. "We know some will call this circular financing," she stated, adding that the company views the investments differently and expects excellent equity returns with limited risk.
Data center revenue drove the quarter, reaching $89.02 billion on a 117 percent year-over-year increase. Hyperscale sales doubled to $48.7 billion, while artificial intelligence cloud and enterprise sales grew 138 percent to $40.3 billion. Meanwhile, Nvidia returned a record $26 billion to shareholders through dividends and buybacks during the period.
