Nvidia’s AI Growth Comes With Bigger Bets and Rising Risks

Nvidia’s fiscal 2027 second-quarter results underscored the scale of spending on artificial intelligence infrastructure. Revenue rose 106 per cent from a year earlier to US$96.2 billion, while data-centre revenue increased 117 per cent to US$89 billion.

The chipmaker reported US$63.7 billion in GAAP operating income and US$69.9 billion in free cash flow. It returned about US$46 billion to shareholders through buybacks and dividends during the first half of fiscal 2027, while retaining substantial capacity to invest in research, development and supply.

The next major growth driver is expected to be Nvidia’s Vera Rubin platform, which is already in production. Management expects it to account for about 20 per cent of data-centre revenue in the fiscal 2027 third quarter. Nvidia said purchase orders had been received from every major hyperscaler, AI cloud provider and equipment manufacturer.

The outlook remains dependent on the ability of customers to deploy infrastructure and earn adequate returns from it. Nvidia has warned that shortages of land, power and other data-centre infrastructure could delay deployments. Recent growth at Microsoft Azure, Amazon Web Services and Google Cloud points to strong demand, but does not establish that the industry’s large investments will deliver sufficient long-term returns.

Nvidia also reported US$366 billion in future spending commitments and guarantees of up to US$108.5 billion, including a US$105 billion guarantee linked to an OpenAI data-centre project. Gross margins, meanwhile, are expected to fall from 75 per cent in the second quarter to 71–72 per cent in the fourth quarter and 72–73 per cent in fiscal 2028, partly because of higher memory prices.

The Motley Fool article, published through Yahoo Finance, said Nvidia’s valuation was better supported by current earnings and cash flow than that of many AI stocks, while cautioning that the shares were not cheap. The valuation cited was about 25 times estimated fiscal 2027 earnings and 15 times estimated fiscal 2028 earnings, leaving the investment case tied closely to the company delivering the growth currently expected.