Nvidia CEO Signals Strong Momentum for Shareholders
Key Points
Nvidia posted its fiscal Q2 results near the end of last month, recording another impressive quarter.
CEO Jensen Huang guided for roughly 70% sales growth and impressive margins in the next fiscal year.
Nvidia is scoring meaningful wins outside of the AI GPU market.
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After the market closed on Aug. 26, Nvidia (NASDAQ: NVDA) delivered its earnings report for the second quarter of its 2027 fiscal year -- a period that ended July 26. The company delivered another blowout quarter, with non-GAAP (adjusted) earnings per share of $2.22 on sales of $96.22 billion breezing past the average Wall Street analyst target of $2.10 per share on sales of $92.17 billion.
As impressive as the artificial intelligence (AI) hardware leader's fiscal Q2 report was, forward guidance and overall business commentary from the company's CEO, Jensen Huang, were arguably even more encouraging.
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Jensen Huang outlined an incredible operating outlook for Nvidia
While Nvidia's year-over-year revenue growth of 106% in fiscal Q2 put the company's sales significantly above the average Wall Street guidance, its target for sales growth in the next fiscal year was even more surprising. While the average analyst estimate had modeled sales growth of 44% in fiscal 2028, Huang said that the company actually expected sales growth to come in at roughly 70%.
Meanwhile, the CEO said he anticipates gross margins to be between 72% and 73% for the year -- reflecting expectations that gross margins will improve after bottoming out at 71%-72% in the fourth quarter of the current fiscal year. For a heavily hardware-focused business, the idea of gross margins "bottoming" in the low-70s is incredible -- and it shows just how strong Nvidia's pricing power has remained. Notably, Huang also said the company's forecast of 70% annual sales growth next year reflected supply-constraint headwinds.
During the Q2 investor conference call, Huang also provided a very encouraging update on the scaling of Nvidia's Vera Rubin platform. Huang expects the Vera Rubin graphics processing units (GPUs) to have the fastest product ramp in the company's history, and Nvidia's opportunities in the AI compute stack are also rapidly expanding in other categories. While the company estimates a $25 billion revenue opportunity per gigawatt of AI compute with its Blackwell family of processors, it anticipates a $40 billion revenue opportunity per gigawatt with its Vera Rubin family.
Along with its leading position in AI GPUs, the company also sees huge expansion opportunities with its Vera central processing units (CPUs) and accompanying networking technologies. Huang expects CPU revenue to more than double next fiscal year, making Nvidia one of the leading suppliers in the server CPU market.
Commentary from the CEO and other leaders at the company suggests that the AI hardware leader is not only continuing to dominate the artificial GPU market across virtually all categories, but it's also scoring wins in other compute areas that should help it continue posting impressive sales and earnings growth.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
