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Nvidia’s earnings showed growth is still accelerating

Nvidia has delivered remarkable growth over the past five years in both share performance and market value. The stock has climbed 817.8% over that period, while the company’s market capitalization has risen from roughly $557 billion to $5 trillion. Even so, the key debate in the market remains whether the stock is expensive at this scale.

According to the company’s results for the second quarter of fiscal 2027, announced on August 26, total revenue came in at $96.2 billion. That marked a 106% increase year over year, while adjusted earnings per share rose 120% to $2.22. Data center operations once again accounted for most of the revenue growth.

Data center revenue and the product transition stood out

Revenue from the data center division was reported at $89 billion for the quarter. That figure was up 18% from the previous quarter and 117% from the same period last year. Management said the Blackwell platform played a major role in that growth.

The company expects third-quarter revenue of about $108 billion, with a margin of error of plus or minus 2%. It also said Vera Rubin is expected to account for about 20% of data center revenue, while total revenue is projected to grow 70% in fiscal 2028. Even so, the company stressed that the outlook remains constrained by supply limits.

Why does the valuation remain relatively modest?

Despite this strong growth, the stock is trading at 23 times fiscal 2027 forward earnings. Based on analyst estimates, Nvidia’s fiscal 2027 revenue could rise 83% to $396.73 billion, while earnings per share may increase 89.8% to $9.05. Fiscal 2028 is also expected to bring 44.6% revenue growth and 45% earnings growth.

Several factors are keeping the market’s pricing more restrained:

  • Rising competition: Google’s TPUs, Amazon’s Trainium and Microsoft’s in-house chips.
  • Customers turning into rivals: OpenAI, Anthropic and Meta are also developing their own custom chip solutions.
  • Search for alternative supply: AMD is strengthening its case as a second source in AI computing.

AWS partnership supports the growth story

Management said capital spending by the five largest hyperscale cloud providers could reach about $800 billion in 2026 and $1.3 trillion in 2027. That underscores the scale of the AI infrastructure market where Nvidia operates. Amazon’s AWS (Amazon Web Services) unit also plans to deploy an additional 2 million Nvidia GPUs from this quarter through the second quarter of fiscal 2029, supporting the demand outlook.

The company also aims to make its Nemotron models available through cloud services and use physical AI technologies in warehouse robots. Management said Vera Rubin could create an opportunity worth roughly $40 billion in revenue per gigawatt in AI data centers, more than double the Hopper level.

Wall Street’s view and the possible impact on the stock

The outlook from Wall Street remains largely positive. Of the 48 analysts covering Nvidia, 43 rate it a strong buy, 3 a moderate buy, 1 a hold and 1 a strong sell. The average price target of $307.38 points to 37% upside from current levels, while the highest target of $500 implies 122% upside over the next 12 months.

This suggests the market is pricing in both slower-growth and competition risks, while still recognizing the company’s extraordinary revenue and earnings momentum. The financial data indicate that as Nvidia’s scale expands, its valuation multiple is not inflating at the same pace.

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