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The company continues to dominate the artificial intelligence (AI) computing market and remains one of the biggest beneficiaries of rising AI infrastructure spending. NVIDIA’s powerful graphics processing units (GPUs), networking products and full-stack AI platforms have become essential for companies building and operating AI data centers.
With hyperscale cloud providers, AI startups, enterprises and governments increasing their investments in AI infrastructure, NVIDIA appears well-positioned to deliver another strong quarter. The company's third-quarter revenue guidance of $108 billion, plus or minus 2%, reflects this strong demand.
NVIDIA’s Data Center business has been the biggest contributor to its recent growth. In the second quarter of fiscal 2027, Data Center revenues jumped 117% year over year and 18% sequentially to a record $89.02 billion. The growth was driven by strong demand for its Blackwell Ultra infrastructure, with both hyperscale and AI Clouds, Industrial and Enterprise (ACIE) customers contributing significantly.
This positive trend is expected to have continued in the third quarter. One of the biggest growth drivers could be continued investments by hyperscale cloud providers. During the last earnings call, NVIDIA's management noted that the cloud industry's backlog exceeded $2 trillion, while capital expenditures by the top five hyperscalers are expected to reach nearly $800 billion in 2026 and $1.3 trillion in 2027.
Amazon Web Services has also announced plans to deploy an additional 2 million NVIDIA GPUs between the third quarter of fiscal 2027 and the second quarter of fiscal 2029. These investments should have supported demand for NVIDIA's computing platforms in the third quarter.
Another important growth driver is the rising demand from AI startups, enterprises, sovereign customers and regional cloud providers. In the second quarter, ACIE revenues surged 138% year over year and 25% sequentially to $40.31 billion. Growth was driven by additional capacity from NeoCloud providers, rising enterprise and AI startup demand, and hyperscalers purchasing AI cloud capacity to supplement their own infrastructure. This diversified customer base is anticipated to have supported Data Center growth in the third quarter.
The ramp-up of NVIDIA's latest products is likely to have provided another boost. The company has commenced production shipments of its next-generation Vera Rubin platform and expects it to account for approximately 20% of Data Center revenues in the third quarter. Its full-stack AI infrastructure, including GPUs, CPUs, networking products and software, also helps customers build and operate AI data centers more efficiently. Growing adoption of agentic AI, which requires substantial computing power to perform complex tasks, could further increase demand for NVIDIA's products.
However, supply constraints and rising memory prices remain important concerns. NVIDIA expects its third-quarter gross margin to be approximately 74%, reflecting higher component costs. Moreover, management expects sequential growth to be driven primarily by ACIE, while hyperscale growth is expected to accelerate in the fourth quarter.
Overall, strong AI infrastructure spending, expanding customer demand and the Vera Rubin ramp-up are likely to have contributed to NVIDIA's Data Center business growth in the third quarter. The Zacks Consensus Estimate for third-quarter data center revenues is pegged at $101.24 billion, indicating an approximately 97.7% year-over-year increase and a 13.7% sequential rise.
The Zacks Consensus Estimate for Taiwan Semiconductor’s 2026 earnings has moved upward by 29 cents over the past seven days to $17.36 per share, calling for an increase of 63% year over year. Taiwan Semiconductor’s shares have climbed 44.1% in the trailing 12 months.
The Zacks Consensus Estimate for Teradyne’s 2026 earnings is pegged at $9.41 per share, which has moved north 3.3% over the past 30 days and suggests a year-over-year jump of 137.36%. Teradyne’s shares have soared 56.3% over the past year.
The Zacks Consensus Estimate for Texas Instruments’ 2026 earnings has been revised upward to $8.97 per share from $8.42 over the past 30 days. The consensus mark for the bottom line indicates a year-over-year increase of 64.6%. Texas Instruments’ shares have surged 92.9% over the past year.
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Can AI Infrastructure Demand Sustain NVIDIA's Q3 Data Center Growth?
Key Takeaways
NVIDIA Corporation (NVDA - Free Report) is scheduled to report third-quarter fiscal 2027 earnings on Nov. 17, and expectations are high.
The company continues to dominate the artificial intelligence (AI) computing market and remains one of the biggest beneficiaries of rising AI infrastructure spending. NVIDIA’s powerful graphics processing units (GPUs), networking products and full-stack AI platforms have become essential for companies building and operating AI data centers.
With hyperscale cloud providers, AI startups, enterprises and governments increasing their investments in AI infrastructure, NVIDIA appears well-positioned to deliver another strong quarter. The company's third-quarter revenue guidance of $108 billion, plus or minus 2%, reflects this strong demand.
NVIDIA Corporation Price and EPS Surprise
NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote
Data Center: NVIDIA’s Key Growth Catalyst
NVIDIA’s Data Center business has been the biggest contributor to its recent growth. In the second quarter of fiscal 2027, Data Center revenues jumped 117% year over year and 18% sequentially to a record $89.02 billion. The growth was driven by strong demand for its Blackwell Ultra infrastructure, with both hyperscale and AI Clouds, Industrial and Enterprise (ACIE) customers contributing significantly.
This positive trend is expected to have continued in the third quarter. One of the biggest growth drivers could be continued investments by hyperscale cloud providers. During the last earnings call, NVIDIA's management noted that the cloud industry's backlog exceeded $2 trillion, while capital expenditures by the top five hyperscalers are expected to reach nearly $800 billion in 2026 and $1.3 trillion in 2027.
Amazon Web Services has also announced plans to deploy an additional 2 million NVIDIA GPUs between the third quarter of fiscal 2027 and the second quarter of fiscal 2029. These investments should have supported demand for NVIDIA's computing platforms in the third quarter.
Another important growth driver is the rising demand from AI startups, enterprises, sovereign customers and regional cloud providers. In the second quarter, ACIE revenues surged 138% year over year and 25% sequentially to $40.31 billion. Growth was driven by additional capacity from NeoCloud providers, rising enterprise and AI startup demand, and hyperscalers purchasing AI cloud capacity to supplement their own infrastructure. This diversified customer base is anticipated to have supported Data Center growth in the third quarter.
The ramp-up of NVIDIA's latest products is likely to have provided another boost. The company has commenced production shipments of its next-generation Vera Rubin platform and expects it to account for approximately 20% of Data Center revenues in the third quarter. Its full-stack AI infrastructure, including GPUs, CPUs, networking products and software, also helps customers build and operate AI data centers more efficiently. Growing adoption of agentic AI, which requires substantial computing power to perform complex tasks, could further increase demand for NVIDIA's products.
However, supply constraints and rising memory prices remain important concerns. NVIDIA expects its third-quarter gross margin to be approximately 74%, reflecting higher component costs. Moreover, management expects sequential growth to be driven primarily by ACIE, while hyperscale growth is expected to accelerate in the fourth quarter.
Overall, strong AI infrastructure spending, expanding customer demand and the Vera Rubin ramp-up are likely to have contributed to NVIDIA's Data Center business growth in the third quarter. The Zacks Consensus Estimate for third-quarter data center revenues is pegged at $101.24 billion, indicating an approximately 97.7% year-over-year increase and a 13.7% sequential rise.
NVDA’s Zacks Rank and Other Stocks to Consider
Currently, NVIDIA carries a Zacks Rank #2 (Buy).
Taiwan Semiconductor Manufacturing Company (TSM - Free Report) , Teradyne Inc. (TER - Free Report) and Texas Instruments Incorporated (TXN - Free Report) are some other top-ranked stocks that investors can consider in the Zacks Computer and Technology sector. Taiwan Semiconductor, Teradyne and Texas Instruments carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Taiwan Semiconductor’s 2026 earnings has moved upward by 29 cents over the past seven days to $17.36 per share, calling for an increase of 63% year over year. Taiwan Semiconductor’s shares have climbed 44.1% in the trailing 12 months.
The Zacks Consensus Estimate for Teradyne’s 2026 earnings is pegged at $9.41 per share, which has moved north 3.3% over the past 30 days and suggests a year-over-year jump of 137.36%. Teradyne’s shares have soared 56.3% over the past year.
The Zacks Consensus Estimate for Texas Instruments’ 2026 earnings has been revised upward to $8.97 per share from $8.42 over the past 30 days. The consensus mark for the bottom line indicates a year-over-year increase of 64.6%. Texas Instruments’ shares have surged 92.9% over the past year.