Nvidia's Record-Breaking Revenue Forecasts Unlikely to Repeat

Nvidia's impressive earnings forecast in May 2021, which predicted $11 billion in quarterly revenue, is unlikely to be repeated in the near future. The company has experienced a series of surging sales and profits since then, but such barnburner quarters are not expected to happen again anytime soon.

Nvidia Corporation (NVDA) recently released its second-quarter 2026 earnings report, providing insights into the company's financial health and future prospects. The report, released on August 27, 2025, showed mixed results, with strong growth in certain segments offset by challenges in others.

Key Highlights

- Revenue Growth: Nvidia's revenue for the quarter was $46.74 billion, marking a 55.6% year-over-year increase. This growth was driven by strong demand for AI products, with supply expanding faster than anticipated [1].
- AI Revenue: AI revenue has been a significant driver for Nvidia, with the segment growing by approximately $4 billion per quarter over the past eight quarters. The company expects a $7 billion boost in the third quarter, driven by the accelerating supply of Blackwell Ultra rack-scale products [1].
- Gaming Segment: Gaming revenue was $18 billion in fiscal 2026, with a 10% average annual growth rate expected thereafter. This segment, formerly Nvidia's largest business, is expected to reach nearly $31 billion in fiscal 2030 [1].
- Automotive Business: The automotive business is poised for significant growth, with revenue expected to reach $10.8 billion by fiscal 2035, growing at a 20% compound annual growth rate [1].
- Financial Health: Nvidia's financial health remains robust, with $57 billion in cash and investments as of July 2025, compared to $8.5 billion in long-term debt [1].

Challenges Ahead

- China Business: Nvidia continues to face restrictions in China, which has limited its ability to sell AI products into the country [1].
- Geopolitical Risks: The uncertainty surrounding geopolitical risks, particularly with China, poses a significant threat to Nvidia's growth prospects [1].
- Customer Diversification: Nvidia's customer base is concentrated among a handful of large tech companies, which may diversify their chip suppliers over time [1].

Investment Outlook

Nvidia's stock is currently trading at around $167, with Morningstar assigning it a fair value estimate of $190 per share. The company's wide economic moat and strong financial health make it an attractive investment, but the high uncertainty rating and geopolitical risks should be considered [1].

Institutional Investor Activity

Covington Investment Advisors Inc. recently increased its stake in Nvidia by 3.2%, owning 194,665 shares worth approximately $21.1 million. This makes Nvidia the fifth-largest position in the firm's portfolio [2].

References

[1] https://www.morningstar.com/stocks/after-earnings-is-nvidia-stock-buy-sell-or-fairly-valued-6
[2] https://www.marketbeat.com/instant-alerts/filing-nvidia-corporation-nvda-shares-purchased-by-covington-investment-advisors-inc-2025-09-09/