Nvidia stock surged after management stunned Wall Street with a preliminary forecast for roughly 70% revenue growth in fiscal 2028, dramatically above the approximately 44%-45% growth analysts had been modeling. The outlook arrived after Nvidia had already reported $96.2 billion of quarterly revenue and guided fiscal Q3 sales to $108 billion, but it was the much longer-range forecast — not the conventional earnings beat — that transformed the market reaction.
NVDA initially struggled after Wednesday’s earnings release as investors focused on lower future gross margins and another massive quarter that appeared largely anticipated. Then CFO Colette Kress told analysts Nvidia expects revenue to grow approximately 70% in the year ending January 2028 despite remaining supply constrained. Nvidia shares reversed sharply higher and were up around 6%-7% Thursday, illustrating just how dramatically that single forecast altered Wall Street’s view of the AI cycle.
Stock Gets the Long-Term Guidance Wall Street Wasn’t Expecting
Nvidia’s fiscal Q2 numbers were already extraordinary. Revenue reached $96.22 billion, up 106% from a year earlier, while adjusted EPS came in at $2.22 compared with roughly $2.09 expected. Data Center revenue climbed 117% to $89 billion, driven by continued Blackwell demand and expanding deployments across hyperscalers, AI clouds, enterprises and sovereign customers.
Management also guided fiscal Q3 revenue to $108 billion, plus or minus 2%, comfortably above Wall Street’s approximately $104.9 billion consensus. That alone represented another substantial beat-and-raise quarter, but investors had become accustomed to Nvidia clearing near-term forecasts by billions of dollars.
What Wall Street had not priced in was another year of explosive growth after fiscal 2027. Analysts were expecting Nvidia’s expansion to slow dramatically as the company’s revenue base became enormous. Consensus had fiscal 2028 growth around 44%-45%; Nvidia instead indicated approximately 70% growth.
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That difference could represent tens of billions of dollars in additional revenue compared with existing expectations.
Why the 70% Forecast Is So Important
The biggest concern surrounding Nvidia stock has gradually shifted from whether AI spending is strong today to how long it can remain strong. Investors already know Microsoft, Amazon, Alphabet, Meta and other major technology companies are spending hundreds of billions of dollars on computing infrastructure. The difficult question has been whether that boom peaks as early adopters complete their first major data-center buildouts.
Nvidia’s guidance directly challenges that bearish assumption. Management expects the top five hyperscalers to spend nearly $800 billion in 2026 and approximately $1.3 trillion in 2027, while cloud-industry backlog has climbed beyond $2 trillion. Nvidia believes AI labs, enterprises, sovereign governments and industrial customers will add another layer of demand beyond conventional hyperscalers.
More importantly, the 70% outlook is supply constrained. Kress told investors Nvidia expects shortages to remain a bottleneck through at least the end of fiscal 2028, implying the company’s forecast reflects what it believes it can ship rather than everything customers currently want to buy.
That is perhaps the most bullish part of the guidance. Nvidia is not saying demand is expected to grow 70%. It is saying revenue could grow roughly 70% even while supply prevents the company from satisfying all available demand.
Jensen Huang Says Growth Could Be Even Faster Without Supply Constraints
CEO Jensen Huang reinforced that message on the earnings call. Management indicated that demand conditions could support growth approaching another doubling if Nvidia had sufficient supply, although the formal preliminary outlook remains around 70%.
This distinction matters because it changes how investors interpret Nvidia’s enormous manufacturing commitments. The company is aggressively securing memory, packaging and other critical components because management believes supply — not customer demand — is the primary limitation on revenue growth.
Nvidia’s component supply commitments reportedly rose to approximately $279 billion, more than doubling from about $119 billion the previous quarter. Much of that commitment is tied to memory and other components required for the Vera Rubin production ramp.
Those numbers would be alarming if Nvidia were building inventory ahead of uncertain demand. They look very different if customers are effectively waiting for every system the company can manufacture.
That is the bet now embedded in NVDA stock.
Vera Rubin Is Becoming the Next Growth Engine
The fiscal 2028 forecast also provides significantly more confidence around Nvidia’s transition from Blackwell to Vera Rubin. Major semiconductor architecture transitions can create revenue gaps when customers delay orders for existing products while waiting for the next generation. Nvidia appears to be avoiding that problem.
The company said Vera Rubin is already ramping into full production, with racks operating at partners including Microsoft Azure, Google Cloud, Oracle Cloud Infrastructure, CoreWeave and Nebius. At the same time, Blackwell continues driving strong current-quarter growth.
That overlap is strategically important. Nvidia is effectively transitioning from one enormous AI accelerator cycle directly into another rather than waiting for Blackwell demand to mature first.
Amazon Web Services is adding another powerful signal. Nvidia announced an expanded AWS relationship involving the deployment of an additional 2 million Nvidia GPUs beginning this quarter and extending through fiscal 2029, alongside Vera CPUs and Rubin-based systems.
A commitment of that scale helps explain why management feels comfortable discussing fiscal 2028 growth far earlier than companies normally provide guidance.
Wall Street Is Starting to Ask Whether Nvidia Can Reach $1 Trillion in Revenue
The 70% growth outlook has forced analysts to rethink Nvidia’s long-term scale. Raymond James analyst Simon Leopold has raised the possibility that Nvidia could eventually approach $1 trillion of annual revenue by fiscal 2029, compared with Wall Street projections previously closer to $750 billion.
That should be treated as an aggressive analyst scenario rather than company guidance. Still, the fact that $1 trillion is entering serious Wall Street discussion demonstrates how radically Nvidia’s financial trajectory has changed.
A company that generated $27 billion of annual revenue in fiscal 2023 is now producing almost $100 billion in a single quarter. Nvidia’s Q3 guidance puts the company above the $100 billion quarterly mark for the first time, and a 70% fiscal 2028 expansion would push annual revenue into territory previously occupied only by the world’s largest consumer and retail businesses.
The company is increasingly being valued not simply as a semiconductor manufacturer, but as the infrastructure supplier behind an entirely new computing economy.
There Is One Major Catch: Gross Margins Are Going Lower
The growth forecast was spectacular, but Nvidia simultaneously delivered a much less comfortable profitability warning. Q2 gross margin was 75%, yet management expects approximately 74% in Q3 before margins potentially bottom around 71%-72% in Q4 and stabilize near 72%-73% during fiscal 2028.
The culprit is memory. Kress described pricing conditions as extreme and said increases have been greater than Nvidia previously expected, with costs set to rise further into next year. Nvidia plans to increase product pricing, but those adjustments will take time to flow through its financial statements.
For a conventional hardware manufacturer, 72%-73% gross margins would be extraordinary. For Nvidia, however, investors have become accustomed to profitability in the mid-70% range, so even several percentage points of compression can have a substantial impact on earnings forecasts.
The tension is therefore straightforward: Nvidia expects dramatically more revenue than Wall Street anticipated, but each incremental dollar may initially carry somewhat less gross profit.
Why Investors Are Looking Through the Margin Warning
The market’s reaction suggests investors consider the growth surprise more important than the margin compression. A few points of gross margin pressure caused by memory shortages are easier to tolerate when the same shortages are partly the result of enormous AI demand.
Nvidia also possesses significant pricing power. If customers are already unable to obtain enough systems, the company has more flexibility to pass rising component costs through to buyers than a supplier operating in a balanced or oversupplied market.
That does not make the margin issue irrelevant. Custom AI chips from Google, Amazon and other hyperscalers continue improving, while semiconductor competition could eventually restrict Nvidia’s pricing power.
For now, however, the numbers suggest the larger constraint is availability rather than competition. Revenue growth of approximately 70% from an already enormous base would be difficult to reconcile with a thesis that customers are rapidly abandoning Nvidia for alternatives.
China Isn’t Included – Creating Another Source of Potential Upside
The company’s near-term forecast also assumes no Data Center compute revenue from China. U.S. export controls continue to restrict the company’s ability to sell advanced AI processors into one of the world’s largest semiconductor markets.
That exclusion makes the current outlook more conservative than it would otherwise appear. If Nvidia eventually receives permission to resume meaningful shipments to Chinese customers, those sales could represent incremental revenue not included in the $108 billion Q3 guide.
Investors should not automatically assume that upside materializes. U.S.-China technology restrictions remain politically sensitive and can change quickly.
Still, Nvidia is forecasting extraordinary growth without relying on one of its historically significant geographic markets. That gives the company another potential option if export conditions eventually improve.
Biggest Risk May Now Be the Scale of Its Own AI Bet
The stronger Nvidia becomes, the larger its financial commitments become as well. Beyond the $279 billion in supply-chain commitments, Nvidia is increasingly involved in financing structures designed to help AI companies and data-center developers fund the infrastructure required to purchase its technology.
Those arrangements have raised concerns about circular financing and whether Nvidia is indirectly supporting some of the demand for its own products. Management argues that the investments help remove infrastructure constraints and that underlying customer economics remain attractive.
This debate will matter more if AI spending slows. Massive supply commitments are beneficial when demand consistently exceeds capacity; they become a risk if customers delay projects or financing conditions tighten.
Nvidia’s 70% forecast therefore raises both sides of the investment case. Management has unprecedented confidence in future demand, but the company is committing unprecedented capital to make that growth possible.
Outlook: Reset the Growth Debate
The headline Nvidia earnings were impressive: $96.2 billion in Q2 revenue, $89 billion from Data Center, $2.22 in adjusted EPS and a $108 billion Q3 sales forecast. But those figures are no longer the most important part of the story.
The number Wall Street will remember is 70%.
That is preliminary expectation for fiscal 2028 revenue growth, compared with roughly 44%-45% previously expected by analysts. It is also a forecast management says is constrained by supply rather than demand.
Investors should now watch the Rubin ramp, memory supply, gross margins, hyperscaler capital spending and whether Nvidia can secure enough components to close the gap between what customers want and what it can deliver.
The risks are real, particularly around margins, massive supply commitments and the sustainability of AI infrastructure financing. But Nvidia has just challenged the central bearish argument that its growth must collapse simply because the company has become too large.
Wall Street expected the company to return toward normal growth. Nvidia just told investors that normal may still be years away — and if 70% really is the supply-constrained case, the biggest surprise may be how much demand remains above it.
