Nvidia's CEO Jensen Huang made an unprecedented move by projecting 70% revenue growth for fiscal 2028, shattering the company's longstanding policy of never forecasting more than one quarter ahead. The projection implies fiscal 2028 revenue between $690 billion and $700 billion, more than $100 billion above analyst consensus of $570 billion. This extraordinary forecast came after the company crushed second-quarter earnings, with revenue hitting $96.2 billion, up 106% year-over-year.

Why Is Nvidia Breaking Its Own Rules on Forecasting?

Huang's decision to provide a full-year forecast marks a dramatic departure from Nvidia's historical practice. "We wanted to make sure that everybody has the same set of information," Huang explained on the earnings call. "We've got a huge year coming up next year, and it's going to be pretty extraordinary." He later acknowledged the unusual nature of the guidance: "It is the case that we've never forecasted, never guided to a year in advance".

The magnitude of this projection stunned Wall Street analysts. Melissa Otto, global head of Visible Alpha research at S&P Global, noted that the 70% figure "blew away expectations," especially given Nvidia's typical reluctance to provide such guidance. The announcement sent Nvidia's stock rallying more than 4% in after-hours trading.

Behind the confidence lies explosive demand across multiple customer segments. Huang revealed that non-hyperscale customers, including sovereign AI initiatives, smaller cloud providers, AI startups, and enterprises, now represent about half of Nvidia's business and are growing at 100% annually. This diversification beyond the major cloud providers like Amazon, Google, and Microsoft suggests the AI chip boom extends far beyond the handful of mega-cap tech companies.

What's Driving the Unprecedented Growth Forecast?

The surge in demand stems partly from a fundamental shift in how AI systems consume computing power. Huang explained that agentic AI, which involves autonomous AI agents performing tasks without constant human direction, requires 15 to 100 times more compute than traditional human-user interactions, depending on the task. He painted a vivid picture of Nvidia's future: "We have 40,000 employees, roughly. In the future, we'll have 400,000 agents, 4 million agents, and those agents are running continuously".

Huang

Nvidia's Chief Financial Officer Colette Kress added that customers' own forecasts pointed to Nvidia's growth doubling next year. However, Huang was candid about a critical constraint: "Our entire supply chain is challenged, and it's everybody; everybody is really running flat out." He emphasized that if supply were unlimited, growth would exceed the 70% projection: "Even though our demand is much greater than 70%, our supply allows us to confidently deliver 70%".

The company also guided third-quarter revenue to $108 billion, matching the so-called "buyside whisper range" that sophisticated investors had been discussing privately. Earnings per share came in at $2.22 on a non-GAAP basis, beating expectations of $2.06 to $2.09.

How Nvidia Is Managing Its Controversial Investments in AI Partners

• Circular Financing Defense: Nvidia disclosed maximum gross guarantee exposure of $108.5 billion, mostly from credit support for SB Energy's Ohio data center hosting Nvidia compute leased to OpenAI. Kress defended these arrangements as low-risk, high-reward investments that build ecosystem demand for Nvidia's platform.
• Frontier AI Lab Investments: Nvidia has invested nearly $50 billion in frontier AI labs and partnered with private equity giants including Apollo, BlackRock, Blackstone, Goldman Sachs, and KKR to raise over $500 billion in third-party capital for AI infrastructure.
• Neocloud Revenue Sharing: For smaller, AI-native cloud providers, Nvidia guarantees minimum data center capacity purchases, satisfying bank requirements. In exchange, Nvidia takes a cut of rental revenue above that threshold, effectively getting paid twice: once on hardware sales and again on revenue sharing.

Critics have warned that Nvidia's extensive investments in AI companies create dangerous interdependencies within the industry. However, Kress argued that the frontier AI labs have "proven technology leaders, traction from customers, and skyrocketing usage." She predicted these companies "will become the largest technology companies in history," with growth limited not by technology or customer demand but by compute availability.

Kress

"We recognize the scale of this support, and we know some will call this circular financing. We see it differently," said Colette Kress, Nvidia's Chief Financial Officer.

Colette Kress, Chief Financial Officer at Nvidia

The market has expressed skepticism about these arrangements. When reports surfaced in July that Nvidia was negotiating to guarantee as much as $250 billion in capacity for OpenAI in Ohio, credit-default swap markets repriced Nvidia's five-year risk from 40 basis points to 82 basis points, and the equity shed approximately $250 billion in value. Even though the final guarantee came in at $105 billion, lower than initial reports, the market interpreted the situation as reflecting less demand rather than less risk.

What About Nvidia's Profit Margins and Supply Challenges?

Nvidia guided third-quarter gross margin to 74%, down from 75% in the second quarter. While this decline might concern investors, S&P Global's Otto noted that the market had already expected 72.6%, meaning Nvidia's guidance actually suggests margins are "more resilient than the market was expecting".

Memory costs remain a persistent headwind across the tech sector. Nvidia's supply and capacity commitments surged from $119 billion to $279 billion, driven by rising memory prices. Kress clarified that the magnitude of memory cost increases prompted Nvidia to reset expectations for higher prices next year.

Huang revealed that Nvidia had worked strategically with memory suppliers to secure long-term agreements with locked-in prices well in advance. "A long time ago, people asked me why it is that we're working with memory suppliers when we're a chip company," Huang said. "Today, people understand it's really quite genius that we were working on" these relationships early.

Huang

The 70% growth projection, combined with Nvidia's dominant market position and expanding customer base, underscores the company's confidence in sustained AI chip demand. Yet the forecast also highlights the tension between explosive demand and real-world supply constraints, as well as ongoing scrutiny of Nvidia's financial entanglements with the AI companies that depend on its chips.