Nvidia has forecast a 70% increase in revenue for its next fiscal year, signalling that demand for artificial intelligence (AI) computing remains exceptionally strong, even as shortages of memory and other components constrain the chipmaker’s ability to expand production.
The company’s shares rose nearly 5% in extended trading on Wednesday after initially falling more than 1%, as investors welcomed the stronger-than-expected outlook.
Nvidia Chief Executive Officer Jensen Huang said the AI industry had reached an important turning point, with AI computing increasingly translating into commercial revenue “AI has reached its inflection point. It’s doing useful work. Its tokens are productive and profitable. Now, compute is revenue,” Huang said.
The outlook could ease concerns among investors who have questioned how long the massive AI spending boom can continue after several years of rapid growth.
Nvidia’s forecast of 70% revenue growth for the fiscal year ending January 2028 is particularly notable because the company rarely provides financial guidance that far in advance. Analysts had previously expected revenue growth of about 44% for the same period.
Nvidia Expects AI Demand to Broaden
The company said demand is increasingly coming from a wider range of customers, including major technology companies, AI laboratories, enterprises, sovereign buyers and industrial customers.
Nvidia executives also outlined plans for continued growth through the rollout of its next-generation Vera Rubin processors and increased sales to AI laboratories, including OpenAI.
The Vera Rubin platform has already begun shipping to customers and is expected to account for approximately 20% of Nvidia’s data centre revenue in the current quarter, which ends in October.
Nvidia’s data centre business remains the main engine of its growth. Revenue from the segment more than doubled to $89 billion in the fiscal second quarter ended July, beating analysts’ average estimate of $85.08 billion, according to LSEG data.
Overall second-quarter revenue increased more than twofold to $96.22 billion, exceeding the $92.17 billion analysts had expected.
Adjusted earnings came in at $2.22 per share, compared with the $2.10 per share expected by analysts.
Supply Constraints Limit Nvidia’s Growth
Despite the strength of demand, Nvidia warned that supply constraints are preventing it from fully capitalising on the market. Chief Financial Officer Colette Kress said customer forecasts suggest demand could support a doubling of Nvidia’s growth next year, but the company remains constrained by supply.
Nvidia also expects rising memory prices and higher component costs to weigh on profit margins. The company expects margins to bottom at approximately 71% to 72% in the fourth quarter, compared with about 74% in the third quarter. Analysts had expected third-quarter margins of around 74.77%.
For the fiscal third quarter, Nvidia forecast revenue of approximately $108 billion, plus or minus 2%, above analysts’ average estimate of $104.19 billion.
AI Laboratories Becoming a Larger Source of Revenue
Nvidia expects AI laboratories to account for roughly one-quarter of its overall business next year, highlighting the growing importance of customers beyond traditional hyperscale cloud companies.
The company also said so-called neo-cloud providers, including Nebius and CoreWeave, are expected to end the year with more than 8 gigawatts of Nvidia GPU capacity, compared with about 3 gigawatts at the end of last year.
Nvidia is also expanding its relationship with Amazon Web Services.
Under the expanded partnership, Amazon’s cloud unit will deploy an additional 2 million Nvidia graphics processors across its global infrastructure in 2027 and 2028.
Nvidia’s outlook does not include data centre revenue from China, reflecting continued uncertainty over US export restrictions and the company’s ability to sell advanced AI chips in the Chinese market.
