Nvidia Earnings: No Signs of a Slowdown in Demand for AI Chips

Key Morningstar Metrics for Nvidia

• Fair Value Estimate: $190
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Very High

What We Thought of Nvidia’s Earnings

Nvidia NVDA reported fiscal second-quarter revenue of $46.7 billion, up 56% year over year and ahead of guidance of $45.0 billion. Third-quarter guidance of $54.0 billion would represent 54% year-over-year growth. Results and guidance both exclude any H20 product revenue sold into China.

Why it matters: No surprise, but there is still tremendous demand for Nvidia’s artificial intelligence products with no signs of a slowdown. Revenue (or lack thereof) from China adds volatility, but we’re most impressed with the Blackwell Ultra rollout and strong demand from leading US cloud customers.

The bottom line: We raise our fair value estimate for wide-moat Nvidia to $190 from $170 and maintain our Very High Uncertainty Rating. Although we reduce and push out our estimates for China revenue, the increase in US supply leads us to boost our near- and medium-term growth rates.

• Nvidia has steadily increased AI revenue by approximately $4 billion per quarter over the past eight quarters as new supply comes online. We’re encouraged that guidance points to a $7 billion boost in the third quarter, with the accelerating supply of Blackwell Ultra rack-scale products.
• Shares sold off modestly after hours, likely because near-term revenue didn’t beat FactSet Consensus estimates by as much as in recent quarters, but we view this as a buying opportunity.

Long view: Nvidia believes the global AI market will grow at a 50% pace and has confidence in the buildout plans of its large customers. Even with our fair value increase, 50% growth in calendar 2026 would represent upside to our model and would be ahead of current consensus estimates.

• Management expects cumulative data center spending of up to $4 trillion over the rest of the decade, while Nvidia has captured about a third of such capital expenditures to date. We view these estimates as both reasonable and a sign that AI spending will not decline anytime soon.