Nvidia forecasts 70% sales growth fuelled by relentless AI boom

Nvidia forecasts a significant 70% jump in revenue for the upcoming fiscal year, signaling continued strong demand for AI computing. This outlook comes despite warnings from the company about persistent shortages of memory components, which could hinder the speed of its expansion. Nvidia's CEO, Jensen Huang, emphasized the current profitability and productivity of AI, stating, "AI has reached its inflection point. It's doing useful work. Its tokens are productive and profitable. Now, compute is revenue."

For the third quarter, Nvidia projects revenue of $108 billion, plus or minus 2%, which surpasses the analyst estimate of $104.19 billion. The company also announced plans with AWS to deploy an additional 2 million GPUs in 2027 and 2028. This strong guidance is expected to reassure investors who have been questioning the longevity of the AI boom.

While Nvidia's shares initially dipped over 1%, they rebounded to rise nearly 5% in extended trading following the announcement. However, some market observers have noted that despite impressive growth, Nvidia's stock performance can be sensitive to even minor misses compared to Wall Street's often elevated expectations. For example, the company's fiscal 2027 second-quarter revenue guidance was $91 billion (plus or minus 2%), while Wall Street anticipated closer to $91.9 billion. This relatively small gap, while still implying nearly 97% year-over-year growth from $46.74 billion, highlights the high bar set for Nvidia. The company's gross margin, currently at an impressive 75%, is also a key metric watched by analysts, as any slip could be perceived as a significant warning even more than a minor revenue miss.

Nvidia's outlook does not assume any data center compute revenue from China, a stance it has held since April 2025 due to U.S. licensing requirements for H20 chips. Any licensed revenue from China would be incremental to their current forecasts. This demonstrates a conservative approach in their projections despite the strong overall demand for AI-related products and services.