Nvidia Projects 70% Growth for 2028 While Cutting Its Margin Outlook

Nvidia projected approximately 70% growth for fiscal 2028, its first year-ahead revenue forecast, while cutting its gross-margin outlook after memory costs exceeded assumptions. Supply, not customer demand, caps the forecast, management said. Shares rose more than 4% in after-hours trading.

Revenue for the quarter ended July 26, 2026, was $96.2 billion, up 106% year over year and 18% sequentially. Non-GAAP diluted earnings reached $2.22 a share from $1.01 a year earlier. Data Center revenue rose 117% to $89.0 billion.

Nvidia expects fiscal 2027 third-quarter revenue of $108.0 billion, plus or minus 2%, above a consensus near $104 billion. It excludes Data Center compute revenue from China, where Hopper shipments were less than 1% of quarterly Data Center revenue.

A forecast beyond the quarter

The preliminary, supply-constrained fiscal 2028 projection exceeds the approximately 44% growth analysts had modeled. Applied to expected fiscal 2027 revenue, it implies $690 billion to $700 billion in sales against roughly $570 billion analysts expected. Nvidia did not quantify unconstrained demand. "Even though our demand is much greater than 70%, our supply allows us to confidently deliver 70%," Chief Executive Jensen Huang said.

Memory resets the margin path

Second-quarter gross margin was 75.0%, up from GAAP and non-GAAP margins of 72.4% and 72.5% a year earlier. Nvidia expects 74.0%, plus or minus half a percentage point, in the third quarter. It expects a 71% to 72% bottom in fiscal 2027's fourth quarter, then 72% to 73% in fiscal 2028 as price increases take effect.

"Many of you have expressed concerns regarding our gross margins, as component costs have risen significantly," Chief Financial Officer Colette Kress said. "As you are already aware, we are experiencing extreme pricing conditions in memory. The magnitude of the price increase has exceeded our prior expectations and are headed even higher into next year."

Melissa Otto, global head of Visible Alpha research at S&P Global, said: "The market was expecting 72.6% for Q3, and the fact that they guided to 74% suggests that their gross margin is actually more resilient than the market was expecting."

Supply and capacity commitments through 2032 rose to $279 billion from $119 billion the previous quarter, primarily for memory procurement. Kress said the AI buildout driving Nvidia's demand is also driving the memory shortage.

Financing adds another risk

On Aug. 26, 2026, Nvidia disclosed $108.5 billion in maximum gross guarantee exposure. Most supports land, power and shell capacity secured through its SB Energy partnership at Ohio's PORTS-Pike Technology Campus for Nvidia compute leased to OpenAI; $3.5 billion backs AI cloud partners' leases. The exposure is potential, not a current loss or payment.

For the first time, the quarterly filing identified indebtedness as a standalone risk factor. On July 26, Nvidia had $33.5 billion in senior notes and a $25 billion commercial paper program. Debt due within one to five years rose to $15 billion from $2.75 billion in the prior quarterly filing.

Kress said: "We recognize the scale of this support, and we know some will call this circular financing. We see it differently." She said independent capital underwrites each deal, with no loans from Nvidia. By Aug. 26, Nvidia had invested nearly $50 billion in frontier AI labs and joined six financial firms seeking more than $500 billion in third-party capital for AI infrastructure.

Credit risk and customer returns

July 2026 reports of a possible $250 billion Nvidia guarantee for OpenAI capacity drove the credit-default-swap market to reprice Nvidia's five-year risk from 40 to 82 basis points, Rex Financial Managing Director Bill Birmingham wrote. "The equity shed $250 (billion) in turn. Even though the final number came in at $105B, the market read this as less demand and not less risk."

Before the Aug. 26 results, Birmingham wrote that Nvidia had raised customer prices about 15% to pass through memory inflation. "It's dangerous to raise prices when ROI for AI at the customer level is still unknown."

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Marcus Schuler

San Francisco

Editor-in-Chief and founder of Implicator.ai. Former ARD correspondent and senior broadcast journalist with 10+ years covering tech. Writes daily briefings on policy and market developments. Based in San Francisco. E-mail: editor@implicator.ai