Against the backdrop of the continued surge in demand for AI computing power, the latest quarterly results released by $NVIDIA (NVDA.US)$ once again prove—with figures far exceeding market expectations—that it holds an unshakable dominant position in the AI chip sector. What has shocked Wall Street even more is that the company’s full-year revenue guidance for fiscal year 2028 is nearly $200 billion higher than market consensus. This directly drove the stock price up more than 7% in early trading today and led multiple analysts to raise their target prices.
Financial performance
- Second-quarter revenue hit a record high of $96 billion, up more than 100% year over year, with growth accelerating for the fourth consecutive quarter
- Data center revenue grew 18% quarter over quarter to $89 billion, driven primarily by the hyperscale and ACINE business segments
- GAAP and non-GAAP gross margin remain at 75%, essentially flat with the prior quarter
- Returned a record $26 billion to shareholders through $20 billion in share buybacks and $6 billion in dividends
Business highlights
- Began shipping the Vera Rubin product to all major hyperscale cloud service providers and cloud providers, and has already received purchase orders
- Expanding its partnership with AWS: starting from the third quarter through FY2029 Q2, deploying an additional 2 million GPUs
- Grace CPU’s revenue exceeded $5 billion over the past 12 months, with strong market acceptance
- Sovereign AI business grew 35% quarter over quarter, more than double year over year
Financial guidance
- Third-quarter total revenue is expected to be $108 billion ± 2%, continuing its strong growth momentum
- Preliminary revenue in FY28 is expected to grow year over year by about 70% (outlook affected by supply constraints)
- Q3 gross margin is expected to be 74% ± 50 basis points, bottoming out at 71%-72% in Q4
- FY27 full-year operating expenses are expected to be about $9.2 billion (GAAP) and $9.0 billion (non-GAAP)
Opportunity
- The opportunity for revenue per gigawatt expands from $18 billion (Hopper) to $40 billion (Vera Rubin)
- Forming strategic partnerships with six infrastructure capital providers to raise more than $500 billion in third-party capital
- Expanding the market through sovereign AI and regional new clouds (neo clouds), with the latter accounting for half of the data center business
-Vera Rubin is expected to set the fastest product ramp-up record in Nvidia’s history
Risks
- A shortage of memory components and extreme pricing conditions negatively impacted gross margin
- Intensifying market competition; leading AI labs are developing custom chips, including OpenAI’s Jalapeno chip, as well as designs specifically for inference
— Rising geopolitical uncertainty; due to related restrictions, the future outlook does not include revenue from China’s data center computing business
- Despite strong unencumbered demand, supply constraints limit revenue growth potential
The new financial forecast shocks Wall Street
In his report, Jefferies analyst Blayne Curtis directly cited a classic (Star Wars) title and even referred to this guidance as “The Emperor Strikes Back” to describe Nvidia’s astonishing performance outlook.
He noted: “The key takeaway from this earnings report is the guidance for full-year revenue growth of 70% in FY2028, while Wall Street expects only 44%—implying $700 billion of revenue, versus consensus of $570 billion, and also $200 billion above the prior $1 trillion Blackwell-plus-Rubin framework. 70% growth is just the baseline; unencumbered demand is close to 100%. Based on that foundation, we clearly see a path for FY2029 revenue to reach $1 trillion. For a company of this scale, that’s an astounding number.” Curtis reiterates Nvidia’s “Buy” rating with a $300 price target.
