Nvidia Crushed Earnings Again. Here’s the Secret Growth Opportunity That Isn’t Even in the Numbers Yet.

Nvidia (NVDA) just delivered another blowout quarter, and the numbers barely feel real anymore. Revenue more than doubled from a year ago to $96.2 billion. The data center business, which is now basically the whole story, accounted for $89 billion of revenue, up 117% year-over-year (YoY). Margins stayed remarkably high, and the company handed back around $26 billion to shareholders through buybacks and dividends. It was the 15th quarter in a row that Nvidia beat Wall Street’s expectations. 

The outlook was just as strong. Management guided to $108 billion in revenue for the third quarter, well above what analysts expected. What makes this even more impressive is that it did so without counting on any sales to China. During the call, CEO Jensen Huang said AI has stopped being a future promise and is now generating revenue as it runs. Supply commitments increased to a mammoth $279 billion, primarily to secure memory and manufacturing capacity for current and future chips. So the company’s boom doesn’t seem to be slowing down anytime soon. 

The Part of the Nvidia Story Few Are Watching

The earnings alone make a strong bull case. But there is a quieter angle that could matter even more, and it has nothing to do with this quarter’s numbers. It is about where AI computing goes next, which is off the planet entirely. Two companies are now racing to build data centers in orbit, where AI chips could run on constant solar power and free cooling. Nvidia has made sure it wins this race no matter which company comes out on top. 

Just days ago, it put money into Starcloud, a startup building the same kind of space data centers SpaceX (SPCX) is now chasing. And Starcloud is arguably ahead. It already has an Nvidia chip running in orbit and trained an AI model up there late last year. It has also filed to launch 88,000 satellites of its own. SpaceX, on the other hand, has yet to put a single Starmind satellite in space. As I covered when the two first partnered, SpaceX has committed to using Nvidia’s chips exclusively for its Starmind satellites, with Musk calling them simply the best. So Nvidia is backing both the giant and the smaller challenger, and it already owned roughly $21 billion of SPCX stock as of June 30. Whichever of them ends up leading the market, the chips inside will carry Nvidia’s name. 

That is the pattern worth noticing. As this quarter showed, Nvidia has already won AI computing on the ground. Now it is making sure it owns the version that happens in orbit too, before that market even exists. 

About Nvidia Stock 

Nvidia operates as a data center-scale AI infrastructure company. It operates through Compute & Networking and Graphics segments. The company provides AI computing platforms, networking products, and software used by cloud providers, enterprises, and research organizations to train and run AI models. The company also produces GeForce GPUs for gaming, RTX GPUs for professional visualization, and technology solutions for autonomous and electric vehicles. Founded in 1993, the company is headquartered in Santa Clara, California. 

NVDA stock posted around a 24% gain over the past year, but its performance fell short of the broader semiconductor sector. The iShares Semiconductor ETF (SOXX) more than doubled during the same period, significantly outperforming the stock. A similar pattern has continued this year. NVDA is up approximately 20% on a year-to-date (YTD) basis, whereas the ETF has surged around 64%.

Nvidia’s stock looks surprisingly cheap for a company growing its business faster than ever. Its forward price-to-earnings (P/E) of 22.56x sits 57% below its 5-year average of 52.52x. Its price-to-sales (P/S) ratio of 13.04x is also about 34% below its average of 19.86x. The company is trading at a considerable discount to its historical norms even as the business is booming. EPS growth trajectory, although estimated to slow down year by year, is solid for a company already worth over $5 trillion. Analysts expect growth of 95% in 2026, 46% in 2027, 30% in 2028, and 13% in 2029. 

The balance sheet is another genuine strength. Nvidia holds $53.17 billion in cash against $12.81 billion in debt, making it comfortably net cash positive. Overall, Nvidia looks reasonably priced against its own history, and that is before counting the space opportunity that isn’t in these numbers yet.

AI Demand Fuels Strong Fiscal 2028 Outlook 

Nvidia reported its second-quarter fiscal 2027 earnings yesterday, Aug. 26. The company’s revenue surged 106% from a year earlier to $96.2 billion. Data center revenue was $89 billion, while hyperscale revenue was $49 billion, up 13% sequentially. Adjusted earnings per share came in at $2.22, comfortably beating the Wall Street consensus of $2.08. The company’s gross margin was 75%, unchanged from the prior quarter. GAAP and non-GAAP operating expenses were up 10% and 11% sequentially, primarily due to high compute infrastructure costs. CFO Colette Kress said the company shipped less than 1% of its total data center revenue in Hopper 200 products to customers based in China, and there is no China data center compute revenue in its forward outlook.

Looking forward, the company expects third-quarter fiscal 2027 revenue of $108 billion. The company also guided for gross margins of 74%, plus or minus 50 basis points, and operating expenses of $9.2 billion on a GAAP basis. CFO Kress said that this is a supply-constrained outlook and the company expects supply to remain a bottleneck through the end of fiscal year 2028. Moreover, management said Vera Rubin shipments began in August, and it is already seeing purchase orders from major hyperscalers, AI cloud providers, and system makers. 

What Do Analysts Expect for NVDA Stock?

Following the earnings, analysts updated their financial models and came up with new price targets for the stock. Goldman Sachs analyst James Schneider reiterated a “Buy” rating and assigned a price target of $300. The analyst’s price target reflects a 33% upside from the current levels. In addition to Goldman Sachs, Bernstein also maintained a “Buy” rating with a price target of $400, which implies an impressive 78% upside from the current share price. 

Based on 48 Wall Street analysts covering the stock, NVDA stock holds a consensus “Strong Buy” rating. Out of those analysts, 43 have a “Strong Buy” rating, three have a “Moderate Buy” rating, one has a “Hold” rating, and one has a “Sell” rating. NVDA has a mean price target of $307.38, which implies a further 37% upside from the current share price. The high price target of $500 reflects a 122% upside. This upside reflects strong confidence in Nvidia’s long-term growth prospects.