Nvidia Says Memory Shortages Are Capping Growth Even as It Forecasts 70% Revenue Gain Next Year

Nvidia Posts Results That Beat Estimates

Memory Shortages Limit Revenue Growth

Company Forecasts 70% Revenue Growth Next Year

Financial Strategy Draws Double-Edged Sword Warning

Nvidia used its earnings report to rebut concerns that artificial intelligence spending is slowing. The chipmaker reported fiscal second-quarter results that beat market estimates and, in an unusual step, gave a revenue growth target for the following year. Nvidia said demand is strong enough that memory shortages are limiting how much faster revenue can grow as its next-generation Vera Rubin systems enter full-scale production. Reuters also reported that demand for AI chips is spreading beyond capital spending by a handful of big tech companies to AI developers, emerging cloud providers, enterprises and sovereign buyers.

Nvidia Beats Expectations, Sees Revenue Rising 70% Next Year

Nvidia said on Aug. 26 that revenue for the second quarter of fiscal 2027, which covers May through July, totaled $96.221 billion. That was up 106% from a year earlier and 18% from the prior quarter. Data center revenue rose 117% from a year earlier to $89 billion.

Reuters and other foreign media outlets reported that the results topped the $85.08 billion consensus estimate compiled by London Stock Exchange Group. Adjusted earnings per share came in at $2.22, above the $2.10 market forecast.

Edge computing revenue rose 27% from a year earlier to $7.2 billion, pointing to expansion beyond data centers. Chief Executive Officer Jensen Huang said AI has reached an inflection point and that computation is now translating directly into revenue.

Focus then shifted to Nvidia's outlook. The company forecast third-quarter revenue of $108 billion, plus or minus 2%, above the $104.19 billion estimate from LSEG. Nvidia also said fiscal 2028 revenue will increase by about 70%.

The long-range forecast was unusual for Nvidia, which does not typically provide guidance that far ahead. Wall Street had been expecting growth of about 44%, making the company's target far more aggressive. Shares, which had initially wavered after the earnings release, jumped nearly 5% in after-hours trading after the forecast was disclosed.

Vera Rubin to Drive Growth, Accounting for 20% of Third-Quarter Data Center Sales

Vera Rubin is central to that growth. Nvidia said the platform has entered full-scale mass production. Reuters reported that customer shipments have already begun and that Vera Rubin is set to account for about 20% of third-quarter data center revenue.

Nvidia also plans with Amazon Web Services to deploy an additional 2 million Nvidia GPUs across global infrastructure in 2027 and 2028. Vera Rubin racks are already operating at CoreWeave, Google Cloud, Microsoft Azure, Oracle Cloud and Nebius.

Its customer base is broadening as well. Nvidia expects AI developers such as OpenAI to account for about a quarter of its business next year. GPU capacity at so-called neocloud providers focused on AI computing and GPU rentals, including Nebius and CoreWeave, is projected to expand from 3 gigawatts at the end of last year to more than 8 gigawatts by the end of this year. Reuters said demand, once concentrated among large cloud companies, is spreading to AI cloud providers, enterprises, sovereign AI projects and industrial customers.

The strategy is also moving beyond GPU sales toward bundling the full AI infrastructure stack. Nvidia plans to create a computing finance platform with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to channel more than $500 billion of third-party capital into AI infrastructure over the long term. The aim is to support financing for AI developers and neocloud providers and broaden the base of GPU demand.

Jacob Bourne, an analyst at market research firm eMarketer, said Nvidia has deepened its relevance across the AI stack and expanded beyond training into inference, models, networking and broader AI infrastructure.

Supply Constraints Remain a Hurdle as New Risk Warnings Emerge

Nvidia identified supply constraints as a brake on growth, signaling continued strong demand for memory and related components. Higher memory prices increase Nvidia's costs, but they are a positive sign for Samsung Electronics and SK Hynix.

Chief Financial Officer Colette Kress said customer forecasts point to growth doubling next year. Even so, Nvidia expects growth of about 70% because of supply constraints.

Gross margin is projected to fall from about 74% in the third quarter to 71% to 72% in the fourth quarter as memory and component prices rise. Nvidia also announced a multiyear technology partnership with SK Hynix on next-generation memory. MarketWatch reported that Nvidia has long targeted gross margins in the mid-70% range, but the company acknowledged that reaching that goal will be difficult in the current environment of unusually high memory chip prices.

Nvidia's aggressive investment and financing support across the AI ecosystem is also emerging as a new source of risk. Reuters, citing Bank of America analysis, reported that Nvidia had made about $70 billion of direct equity investments in AI developers and cloud companies as of Aug. 17. Various commitments, including chip residual-value guarantees and financing support, were estimated at as much as $230 billion.

Morgan Stanley also flagged financial risks tied to support for neocloud providers and guarantees on chip residual values. Analyst Lindsey Tyler said Nvidia is increasingly using its balance sheet as a strategic backstop through neocloud support and chip residual-value guarantees, but that approach could prove to be a double-edged sword.

MarketWatch, citing Morgan Stanley's forecast, reported that Nvidia's total exposure could reach about $200 billion by the end of fiscal 2028. The concern is that if enthusiasm for AI investment cools, customers and Nvidia could be hit at the same time.

China remains another variable. Nvidia said its third-quarter revenue guidance does not include data center computing revenue from China, reflecting continuing uncertainty around US export restrictions and the scope of purchases allowed there.

Kim Dae-young, Hankyung.com reporter kdy@hankyung.com