Shares surged after NVIDIA delivered a quarter that crushed expectations and then dropped a bombshell: a full-year revenue growth forecast so far above Wall Street models it rewrote the math on how big AI spending can get. The company reported earnings of $2.22 per share on revenue of $96.22 billion, versus the $2.10 and $92.17 billion analysts expected. But the real catalyst came later on the call.
A Forecast That Blindsided Even the Bulls
CFO Colette Kress told analysts NVIDIA expects fiscal 2028 revenue growth of 70%, while analysts were expecting just 44%.
Based on the consensus projection for fiscal 2027 revenue of $396 billion, that implies fiscal 2028 sales of roughly $673 billion.
Bernstein analyst Stacy Rasgon called it a "$200 billion uptick versus the prior outlook." That kind of number resets valuation models across the entire chip sector.
The Real Ceiling Is Supply, Not Demand
CEO Jensen Huang said demand "is much greater than 70%," but the company is constrained on the amount of product it can supply.
NVIDIA's main manufacturer continues to face supply constraints, while memory chips — a key component — remain in short supply.
NVIDIA spent $145 billion in Q1 alone to secure parts. For shareholders, this means growth is essentially capped by physical manufacturing limits, not by customers pulling back.
Margins Will Dip Before They Stabilize
The company warned margins would narrow in coming months due to surging memory costs, with gross margin expected to bottom at 71%–72% in the fiscal fourth quarter.
As NVIDIA raises its own prices, margins should settle to 72%–73% in fiscal 2028. That compression is modest, but it signals that even the world's most dominant chipmaker cannot fully pass through component inflation.
Next Quarter Breaks the $100 Billion Barrier
Third-quarter revenue guidance of $108 billion cleared the $104.2 billion consensus and would mark the first time the company has topped $100 billion in quarterly sales.
At the projected fiscal 2028 run rate, NVIDIA would leapfrog Apple and Alphabet in revenue, trailing only Amazon among U.S. tech companies.
The open question: NVIDIA has proven demand is insatiable, but its growth now hinges on a global supply chain it doesn't fully control. Investors betting on the stock at these levels are really betting that the factory floor can keep pace with the AI revolution.