Performance Exceeded Wall Street Expectations Across the Board
NVIDIA's second-quarter revenue reached $96.22 billion, with adjusted earnings per share of $2.22. The market had previously anticipated revenue of $92.37 billion and earnings per share of $2.10, with both core metrics significantly surpassing expectations.
The company expects third-quarter revenue to reach $108.0 billion, higher than the consensus estimate of $105.39 billion from Visible Alpha. Data center revenue grew 117% year-over-year to a record $89.0 billion, also exceeding market expectations of $85.9 billion.
Management projects revenue growth of approximately 70% for the next fiscal year but also indicated that supply bottlenecks continue to constrain delivery capacity. Jensen Huang stated that real demand far exceeds the scale the company is currently able to supply.
Vera Rubin Could Become the Fastest-Ramping Product in History
Chief Financial Officer Colette Kress noted that Vera Rubin has received orders from all major hyperscale cloud providers, AI cloud service providers, and system equipment manufacturers.
The company anticipates that Vera Rubin will become the fastest-ramping product in NVIDIA's history and contribute about 20% of data center revenue in the current quarter. The next-generation platform quickly taking over from Blackwell helps alleviate market concerns about the product cycle peaking.
However, memory supply remains a key constraint. The company expects memory shortages to persist at least until the end of fiscal year 2028. To secure supply and capacity, NVIDIA's purchase commitments through 2032 have increased from $119 billion to $279 billion, primarily involving memory purchases.
Why Slowing Growth Hasn't Broken the Long-Term Thesis
Second-quarter revenue grew 106% year-over-year, but the third-quarter guidance implies a potential deceleration to the 80% to 90% range, with sequential growth also expected to slow. Analyst Luke Lango believes the growth story is indeed slowing down, which might explain the initial stock price volatility following the earnings release.
However, he argues that the slowdown has not yet broken the investment thesis. NVIDIA's forward price-to-earnings ratio is around 18x, near a five-year low. Simultaneously, the company's single-quarter data center revenue reached $89.0 billion, long-term compute procurement commitments grew to $279 billion, and it is involved in infrastructure financing partnerships exceeding $500 billion.
The second-quarter gross margin was 75%, but the company expects it to decline to 74% in the third quarter. Operating expenses grew 55% year-over-year, further illustrating the higher costs required to maintain technological leadership and expand supply.
The bull case for NVDA is that AI infrastructure construction continues to accelerate, Rubin is ramping quickly, and valuations are not at historical extremes. The bear case points to slowing growth rates, declining gross margins, and increased risk from massive supply commitments. Whether the stock price can sustain its post-earnings rally will depend on whether spot capital continues to provide support and whether Rubin deliveries meet expectations.
