We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will NVIDIA's Data Center Business Unit Keep Beating Sales Records?
Read MoreHide Full Article
Key Takeaways
NVIDIA's data center unit posted $41.1B in Q2 FY26 revenues, up 56% year over year.
The Blackwell GB300 systems are ramping up, boosting performance and energy efficiency.
NVIDIA projects Q3 revenues of $54B, with analysts forecasting data center sales to climb 59%.
NVIDIA Corporation’s (NVDA - Free Report) data center business has become the company’s main growth driver, consistently setting new sales records as demand for AI computing surges. In the second quarter of fiscal 2026, the unit reported $41.1 billion in revenues, up 56% from last year, fueled by strong demand from hyperscalers, AI model developers and enterprise customers expanding their AI infrastructure. This performance highlights NVIDIA’s dominant role in powering the global AI buildout.
The ongoing ramp-up of the Blackwell architecture is central to NVIDIA’s momentum. The GB300 systems, which offer higher performance and improved energy efficiency compared to the previous Hopper generation, are now shipping in large volumes. Customers are using these systems to support complex AI workloads, from large language models to real-time inference. NVIDIA’s full-stack approach, which combines GPUs, networking and software, continues to make it the preferred partner for large-scale AI projects.
Management expects data center growth to remain robust, projecting third-quarter total revenues of $54 billion. The Zacks Consensus Estimate for the data center unit is currently pegged at $48.88 billion, indicating a year-over-year increase of approximately 59%. These projections do not factor in potential sales of H20 chips to China, suggesting additional upside as the company has received export approvals for the same.
NVIDIA’s technological lead, deep ecosystem and strong customer relationships suggest that its data center business could continue breaking records through 2026 and beyond. The consensus mark for the data center business unit’s fiscal 2026 revenues is pegged at $182.12 billion, indicating a year-over-year increase of 58%.
NVIDIA’s Competitors in the AI Data Center Space
Advanced Micro Devices, Inc. (AMD - Free Report) and Intel Corporation (INTC - Free Report) are two major companies that are competing closely with NVIDIA in the AI data center space.
Advanced Micro Devices is gaining traction with its MI300 series accelerators, which are designed to handle training and inference for large AI models. AMD’s chips have attracted interest from major cloud providers seeking diversification beyond NVIDIA’s ecosystem. While Advanced Micro Devices’ software stack is still developing, its performance and pricing advantages make it a credible alternative.
Intel is also reasserting its presence with the Gaudi series of AI accelerators. The company is positioning Gaudi 3 as a cost-effective and scalable option for AI data centers, targeting enterprise clients looking for flexibility. Intel’s broad reach in CPUs and server infrastructure helps it integrate AI solutions more easily into existing systems.
NVIDIA’s Price Performance, Valuation and Estimates
Shares of NVIDIA have risen around 40.8% year to date compared with the Zacks Computer and Technology sector’s gain of 22.8%.
NVIDIA YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, NVDA trades at a forward price-to-earnings ratio of 33.46, higher than the sector’s average of 29.27.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NVIDIA’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 48.8% and 39.3%, respectively. Estimates for fiscal 2026 and 2027 earnings have been revised upward in the past 30 days.
Image: Bigstock
Will NVIDIA's Data Center Business Unit Keep Beating Sales Records?
Key Takeaways
NVIDIA Corporation’s (NVDA - Free Report) data center business has become the company’s main growth driver, consistently setting new sales records as demand for AI computing surges. In the second quarter of fiscal 2026, the unit reported $41.1 billion in revenues, up 56% from last year, fueled by strong demand from hyperscalers, AI model developers and enterprise customers expanding their AI infrastructure. This performance highlights NVIDIA’s dominant role in powering the global AI buildout.
The ongoing ramp-up of the Blackwell architecture is central to NVIDIA’s momentum. The GB300 systems, which offer higher performance and improved energy efficiency compared to the previous Hopper generation, are now shipping in large volumes. Customers are using these systems to support complex AI workloads, from large language models to real-time inference. NVIDIA’s full-stack approach, which combines GPUs, networking and software, continues to make it the preferred partner for large-scale AI projects.
Management expects data center growth to remain robust, projecting third-quarter total revenues of $54 billion. The Zacks Consensus Estimate for the data center unit is currently pegged at $48.88 billion, indicating a year-over-year increase of approximately 59%. These projections do not factor in potential sales of H20 chips to China, suggesting additional upside as the company has received export approvals for the same.
NVIDIA’s technological lead, deep ecosystem and strong customer relationships suggest that its data center business could continue breaking records through 2026 and beyond. The consensus mark for the data center business unit’s fiscal 2026 revenues is pegged at $182.12 billion, indicating a year-over-year increase of 58%.
NVIDIA’s Competitors in the AI Data Center Space
Advanced Micro Devices, Inc. (AMD - Free Report) and Intel Corporation (INTC - Free Report) are two major companies that are competing closely with NVIDIA in the AI data center space.
Advanced Micro Devices is gaining traction with its MI300 series accelerators, which are designed to handle training and inference for large AI models. AMD’s chips have attracted interest from major cloud providers seeking diversification beyond NVIDIA’s ecosystem. While Advanced Micro Devices’ software stack is still developing, its performance and pricing advantages make it a credible alternative.
Intel is also reasserting its presence with the Gaudi series of AI accelerators. The company is positioning Gaudi 3 as a cost-effective and scalable option for AI data centers, targeting enterprise clients looking for flexibility. Intel’s broad reach in CPUs and server infrastructure helps it integrate AI solutions more easily into existing systems.
NVIDIA’s Price Performance, Valuation and Estimates
Shares of NVIDIA have risen around 40.8% year to date compared with the Zacks Computer and Technology sector’s gain of 22.8%.
NVIDIA YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, NVDA trades at a forward price-to-earnings ratio of 33.46, higher than the sector’s average of 29.27.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NVIDIA’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 48.8% and 39.3%, respectively. Estimates for fiscal 2026 and 2027 earnings have been revised upward in the past 30 days.
Image Source: Zacks Investment Research
NVIDIA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.