NVIDIA NASDAQ: NVDA reported record second-quarter results for fiscal 2027, with revenue more than doubling from a year earlier to $96 billion, as demand for artificial intelligence infrastructure continued to expand across hyperscalers, cloud providers, enterprises and sovereign customers.
Chief Financial Officer Colette Kress said the company expects revenue to grow by approximately 70% in fiscal 2028, though she characterized that outlook as supply-constrained. NVIDIA forecast third-quarter revenue of $108 billion, plus or minus 2%.
“The surge in AI demand is driving a global infrastructure build-out,” Kress said, citing demand from hyperscalers, AI laboratories, AI-native businesses, enterprise customers and sovereign AI initiatives.
Data center growth and product ramp
Data center revenue rose 18% sequentially to $89 billion in the second quarter. Revenue from hyperscale customers was $49 billion, up 13% from the prior quarter, driven by demand for Blackwell products. Revenue in NVIDIA’s ACIE category, which includes NeoCloud, industrial and enterprise customers, rose 25% sequentially and 138% year over year to $40 billion.
Kress said NVIDIA Compute was “fully utilized across every cloud we serve.” She also said NeoCloud partners using NVIDIA’s DSX reference designs are expected to exit the year with 8 gigawatts of installed capacity, compared with roughly 3 gigawatts at the end of 2025.
NVIDIA announced an expanded partnership with Amazon Web Services under which AWS plans to deploy an additional 2 million NVIDIA GPUs beginning in the current quarter through the second quarter of fiscal 2029. The deployment will include Vera CPUs, some integrated with Rubin products and some deployed as standalone processors, according to Kress.
The company began production shipments of its Vera Rubin platform earlier in August and said it had received purchase orders from every major hyperscaler, AI cloud provider and system original equipment manufacturer. Kress said NVIDIA expects Vera Rubin to be its fastest product ramp to date and expects the platform to account for about 20% of data center revenue in the third quarter.
NVIDIA’s networking revenue also reached a record, increasing 18% sequentially. Spectrum-X Ethernet revenue grew 2.6 times from a year earlier, Kress said. The company also said it is in full production of its Vera CPU and expects CPU revenue to more than double in fiscal 2028, based on customer demand and its improving supply outlook.
AI infrastructure economics and customer financing
CEO Jensen Huang said the company’s outlook reflects both hyperscale demand and growth in markets outside the largest cloud operators. He said NVIDIA’s ACIE segment, including enterprises, NeoClouds and sovereign AI customers, represents about half of its business and is growing at an annual rate of 100%.
Huang also highlighted the company’s expanding revenue opportunity per gigawatt of data center capacity. NVIDIA estimated that opportunity at roughly $18 billion during the Hopper generation, $25 billion with Blackwell and $40 billion with Vera Rubin, including CPUs, GPUs, networking, systems and software.
“Our demand is much higher than” the 70% growth outlook, Huang said, adding that the company is working with suppliers to expand capacity. He said NVIDIA’s supply chain is broadly constrained and that the company has supply sufficient to support approximately 70% growth, while demand exceeds that level.
Kress said NVIDIA has invested nearly $50 billion in frontier AI laboratories and has partnered with Apollo Global Management, BlackRock, Blackstone, Brookfield Asset Management, Goldman Sachs and KKR on financing platforms expected to raise more than $500 billion in third-party capital.
The company also described a revenue-sharing arrangement with NeoCloud providers. NVIDIA can provide take-or-pay commitments on part of a facility’s capacity to support project financing, then share in revenue generated above a defined minimum level. Kress said the model could create a recurring, usage-linked revenue stream in addition to hardware sales over the medium to long term.
NVIDIA said it secured land, power and shell capacity through SB Energy for a Portsmouth campus expected to support 4.25 gigawatts of AI factory capacity, with the initial deployment intended for OpenAI. OpenAI’s existing and planned commitments represent approximately 12 gigawatts of NVIDIA Compute through 2030, according to Kress.
Margins, China exposure and capital returns
GAAP and non-GAAP gross margin were both 75% in the second quarter, largely unchanged sequentially. Operating expenses increased 10% on a GAAP basis and 11% on a non-GAAP basis from the prior quarter, driven primarily by compute infrastructure and employee compensation costs.
For the third quarter, NVIDIA forecast GAAP and non-GAAP gross margins of 74%, plus or minus 50 basis points. Kress said gross margins are expected to bottom in the 71% to 72% range in the fourth quarter before settling at 72% to 73% in fiscal 2028 as price increases take effect.
The company cited “extreme pricing conditions” in memory, saying memory cost increases have surpassed its earlier expectations. Kress said tighter memory supply is partly a result of the same AI infrastructure build-out that is supporting NVIDIA’s demand.
Inventory rose to $32 billion as NVIDIA prepared for the Vera Rubin launch. Days sales outstanding increased to 60 days, reflecting extended payment terms for certain large investment-grade customer purchases scheduled for shipment across multiple quarters.
NVIDIA said it shipped less than 1% of total data center revenue in Hopper 200 products to China-based customers during the second quarter under U.S. government licenses. The company said those shipments reduced corporate gross margins and that its forward outlook includes no China data center compute revenue because of geopolitical uncertainty.
During the quarter, NVIDIA returned a record $26 billion to shareholders, including $20 billion in share repurchases and $6 billion through its quarterly dividend of $0.25 per share. The company said it had returned 60% of free cash flow year to date, above its plan to return at least 50% of free cash flow.
About NVIDIA (NASDAQ:NVDA)
NVIDIA Corporation, founded in 1993 and headquartered in Santa Clara, California, is a global technology company that designs and develops graphics processing units (GPUs) and system-on-chip (SoC) technologies. Co-founded by Jensen Huang, who serves as president and chief executive officer, along with Chris Malachowsky and Curtis Priem, NVIDIA has grown from a graphics-focused chipmaker into a broad provider of accelerated computing hardware and software for multiple industries.
The company's product portfolio spans discrete GPUs for gaming and professional visualization (marketed under the GeForce and NVIDIA RTX lines), high-performance data center accelerators used for AI training and inference (including widely adopted platforms such as the A100 and H100 series), and Tegra SoCs for automotive and edge applications.
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