Nvidia is set to report its fiscal second-quarter earnings, with analysts expecting revenue to almost double from a year earlier, reaching an estimated $92.2 billion. This represents approximately 97% year-over-year growth from the $46.7 billion reported in the same quarter last year. The growth is largely fueled by intense demand for Nvidia's AI chips, especially from major hyperscale cloud providers such as Amazon, Google, and Microsoft, along with other significant buyers like Meta and SpaceX.
While the market expects an impressive performance, there's concern about Nvidia's dependence on a concentrated group of large customers. Hyperscalers have accounted for an outsized amount of revenue, comprising about 55% of data center revenue in the past year. However, Nvidia has been working to diversify its customer base, with its ACIE (AI Cloud Providers, Enterprises, Industry, Government) segment showing faster growth. In the first quarter, hyperscaler sales were $37.9 billion, while ACIE revenue was nearly $37.5 billion, with ACIE growing at 31% compared to 12% for hyperscalers. Analysts project this trend to continue, with ACIE annual growth expected to be 149% to $43 billion in Q2, surpassing hyperscaler growth of 83% to $43.6 billion.
Nvidia's data center division is expected to be the primary driver of sales, projected to reach $86.3 billion in Q2, accounting for 94% of the total revenue, up from 92% in the first quarter. For the full year, analysts anticipate 83% revenue growth to $396 billion, moderating to 44% in the following year. To further diversify and address the high cost of its rack-scale systems, Nvidia is collaborating with financial firms to create a financing program that could leverage up to $500 billion from investors, allowing more companies to purchase GPUs as an asset class.
Key metrics to watch in the upcoming earnings report include sales of its new Vera Rubin systems, which are just beginning to ramp up. CEO Jensen Huang previously indicated expectations for $1 trillion in sales through 2027 from the Blackwell and Vera Rubin architectures. Analysts are also keen on details regarding Nvidia's financing initiatives, which aim to broaden access to its advanced AI hardware, as well as the company's gross margin, which is already at a high 75%.
