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Can NVIDIA's Data Center Business Sustain Its High Growth Momentum?
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Key Takeaways
NVIDIA data center revenues jumped 75% YoY to $62.31B, accounting for 91.5% of total sales.
Growth was fueled by GB300 adoption and networking products like NVLink and Spectrum-X.
NVIDIA sees momentum from Blackwell shipments, and expanding cloud and enterprise AI demand.
NVIDIA Corporation’s (NVDA - Free Report) data center business unit has been the company’s most powerful growth engine over the past few quarters. The segment generated record revenues of $62.31 billion in the fourth quarter of fiscal 2026, representing 91.5% of total sales. This marked a staggering 75% year-over-year increase and 22% sequential growth.
The segment reached new highs as demand for accelerated computing, generative artificial intelligence (AI) and large-scale model training continued to rise across cloud providers and enterprise customers. Much of the momentum came from the rapid adoption of the GB300 platform and wider deployment of NVIDIA’s networking products, including NVLink and Spectrum-X. With hyperscalers racing to expand AI capacity, NVIDIA remained a key beneficiary of record spending on high-performance infrastructure.
The near-term outlook for the data center segment seems solid, with the company expecting strength from Blackwell shipments and expanding orders across cloud, sovereign AI and enterprise AI projects. NVIDIA also sees the growing adoption of agentic AI, long-context workloads and advanced inference systems, all of which depend on high-performance GPU clusters, as key catalysts for long-term growth.
The growing demand for the company’s AI chips used in data centers is likely to continue aiding its data center business performance. The Zacks Consensus Estimate for fiscal 2027 data center revenues is currently pegged at approximately $309 billion, indicating a year-over-year increase of 59%.
Growth momentum across the data center unit will continue aiding NVIDIA’s overall top-line performance. Analysts’ projections also suggest that the company is expected to surpass the first-quarter fiscal sales target of $78 billion. The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $78.66 billion, calling for a year-over-year surge of 78.5%.
NVIDIA’s Rivals 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 Gaudi3 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 54.6% over the past year compared with the Zacks Semiconductor – General industry’s gain of 50.8%.
NVIDIA One-Year Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, NVDA trades at a forward price-to-earnings ratio of 20.08, below the industry’s average of 22.21
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 and 2028 earnings implies a year-over-year increase of approximately 66.9% and 30.7%, respectively. Estimates for fiscal 2027 and 2028 have been revised upward in the past seven days.
View the Zacks #1 Rank List
Image: Bigstock
Can NVIDIA's Data Center Business Sustain Its High Growth Momentum?
Key Takeaways
NVIDIA Corporation’s (NVDA - Free Report) data center business unit has been the company’s most powerful growth engine over the past few quarters. The segment generated record revenues of $62.31 billion in the fourth quarter of fiscal 2026, representing 91.5% of total sales. This marked a staggering 75% year-over-year increase and 22% sequential growth.
The segment reached new highs as demand for accelerated computing, generative artificial intelligence (AI) and large-scale model training continued to rise across cloud providers and enterprise customers. Much of the momentum came from the rapid adoption of the GB300 platform and wider deployment of NVIDIA’s networking products, including NVLink and Spectrum-X. With hyperscalers racing to expand AI capacity, NVIDIA remained a key beneficiary of record spending on high-performance infrastructure.
The near-term outlook for the data center segment seems solid, with the company expecting strength from Blackwell shipments and expanding orders across cloud, sovereign AI and enterprise AI projects. NVIDIA also sees the growing adoption of agentic AI, long-context workloads and advanced inference systems, all of which depend on high-performance GPU clusters, as key catalysts for long-term growth.
The growing demand for the company’s AI chips used in data centers is likely to continue aiding its data center business performance. The Zacks Consensus Estimate for fiscal 2027 data center revenues is currently pegged at approximately $309 billion, indicating a year-over-year increase of 59%.
Growth momentum across the data center unit will continue aiding NVIDIA’s overall top-line performance. Analysts’ projections also suggest that the company is expected to surpass the first-quarter fiscal sales target of $78 billion. The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $78.66 billion, calling for a year-over-year surge of 78.5%.
NVIDIA’s Rivals 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 Gaudi3 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 54.6% over the past year compared with the Zacks Semiconductor – General industry’s gain of 50.8%.
NVIDIA One-Year Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, NVDA trades at a forward price-to-earnings ratio of 20.08, below the industry’s average of 22.21
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 and 2028 earnings implies a year-over-year increase of approximately 66.9% and 30.7%, respectively. Estimates for fiscal 2027 and 2028 have been revised upward in the past seven days.
Image Source: Zacks Investment Research
NVIDIA currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.