Nvidia Projects 70% Revenue Growth Next Year. What This Means for NVDA Stock Investors.

Just when everyone thought that Nvidia (NVDA) may have lost its magic, it has pulled a rabbit out of the hat. No, it is not the usual beat and raise from its quarterly results. This time, Nvidia did something it has never done before—guiding for the next fiscal year. This was a major contributing factor to its shares not falling following its earnings, a phenomenon of the last four consecutive quarters.

In fact, the stock was up by as much as 10% at its highest point in the two subsequent trading sessions. Overall, the stock is up about 5% since the earnings.

So, was the guide the only powerful indicator for the market participants to reward it post its Q2 results? Probably, but there is more to it.

70% Growth With Hands Tied

The headline figure of 70% revenue growth in fiscal 2028 was announced by CFO Colette Kress in the company's latest earnings call. As much as this is impressive for a company with an annual revenue run rate of more than $200 billion, it must be noted that the company flagged that it could have been more if it were not constrained by supply chain issues, especially the rising memory prices and shortage of memory components.

Moreover, Nvidia also addressed the concentration issue. Its hyperscaler customer base, which includes cloud majors such as Amazon (AMZN), Microsoft (MSFT), and OpenAI, remains an important revenue driver for the company. However, the ACIE segment, or the cohort that comprises AI Clouds, Industrial, Enterprise, and sovereign customers, has the potential to offset any customer concentration risks. Kress backed this up with data wherein she highlighted that of the $400 billion funding provided by global VCs in the first half of 2026, 70% of the same would be spent on compute. Elaborating on this further, the CFO revealed that 20 such companies have an annualized revenue run rate exceeding $1 billion. This was 13 in Q4 of 2025.

Then there was the case made about open models, an area where CEO Jensen Huang has taken particular interest. This report by Hugging Face, a company that Nvidia is reportedly on the verge of buying, has pointed out that Nvidia and its rival AMD (AMD) have published more than 200 new models each, higher than anyone in the United States. So, Nvidia is doing its bit to expand the open-source community, a community that has a market opportunity of more than $50 billion by 2030.

Sovereign AI is another market that has the potential to negate Nvidia's dependence on hyperscalers if it develops its own custom chips. Nvidia has cornered a monopolistic 92% share in a market that is expected to reach $600 billion by 2030, per consulting major McKinsey.

But why now? What drove Nvidia to give its first-ever next-year revenue guidance? Well, one can only speculate, and the narrative around the hyperscalers developing their own chips with competitors like AMD, Broadcom (AVGO), and Marvell (MRVL) may have pushed the management to remind the market of its dominance in the chip industry and also to signal that there is more to the company's revenue trajectory than only hyperscalers. Meanwhile, highlighting the supply chain constraints served the purpose of pointing out that the company's hands are tied due to the same and not due to the lack of the company's capabilities.

Nvidia's Usual Solid Quarterly Showing

Nvidia delivered outstanding quarterly results with revenue reaching $96.2 billion, representing a 106% increase from the prior year and exceeding Street estimates by more than $4 billion. Data center revenue rose even more sharply by 117% to $89 billion, surpassing expectations of $86.3 billion. Importantly, the company recorded none of this revenue from China. Looking ahead, Nvidia guided for third quarter 2027 total revenue in the range of $105.8 billion to $110.2 billion, compared with analyst estimates around $109 billion.

Gross margins expanded to 75% from 72.4% in the year-ago period. The company’s gross margin outlook of 73.5% to 74.5% for the third quarter of 2027 drew some criticism from observers seeking imperfections in the investment case. Nevertheless, the shares advanced following the results, ending a streak of four consecutive quarters in which the stock declined the day after earnings.

Earnings per share climbed 120% year over year to $2.22, beating the consensus estimate of $2.09 and marking the ninth consecutive quarter of outperforming profit forecasts.

A notable point discussed during the earnings call was the plan by Amazon Web Services, the leading cloud provider, to deploy 2 million graphics processing units from this quarter through the second quarter of 2029. This development helps address broader concerns that hyperscalers might develop their own chips or application-specific integrated circuits and reduce dependence on Nvidia’s products.

Net cash from operating activities increased to $24.1 billion from $15.4 billion in the year-earlier period. This figure included $7.8 billion in gains from equity investments in companies such as OpenAI, SpaceX (SPCX), CoreWeave (CRWV), and Nebius (NBIS). At the same time, accounts receivable rose by a substantial $22.3 billion during the quarter, a figure that has fueled discussions around circular financing dynamics. Nvidia closed the period with $22.4 billion in cash, well above its short-term debt balance of $1 billion.

Despite these strong results, Nvidia’s valuation remains relatively reasonable. The forward price-to-earnings (P/E) ratio of 23.42 times sits just above the sector median of 22.73 times. The forward P/CF multiple of 25.17 is not far from the sector median of 19.99. Although the forward P/S of 12.79 shows a larger gap versus the sector median of 3.50, this difference has not diminished the overall investment appeal.

Nvidia continues to hold the position of the world’s most valuable company, with a market capitalization of $5.12 trillion, and the stock has advanced 18% year-to-date (YTD).

Analyst Opinion of NVDA Stock

Taking all of this into account, analysts believe NVDA stock is a consensus “Strong Buy.” The mean target price of $324.44 indicates a potential upside of 47% from current levels. Out of 48 analysts covering NVDA, 43 have a “Strong Buy” rating, three have a “Moderate Buy” rating, one has a “Hold” rating, and one has a “Strong Sell” rating.