Nvidia (NVDA) just reported $96.2 billion in quarterly revenue, up 106% year over year. The company expects about $108 billion in fiscal Q3 revenue, above Wall Street’s roughly $104 billion estimate. Nvidia also expects revenue to grow about 70% in fiscal 2028, well above the roughly 45% growth FactSet consensus had previously expected. That is a big target for a company already operating at this scale. So, where does Nvidia expect that growth to come from?
CEO Jensen Huang addressed the issue when CNBC’s Jim Cramer asked how Nvidia could deliver 70% growth from such a large base. “Well, it’s not easy, but let’s say, first of all, demand is super strong and, incredibly, it’s accelerating,” Huang said.
The size of that forecast becomes clearer when converted into dollars. Wall Street expects Nvidia to generate about $396 billion in fiscal 2027 revenue. A 70% increase would put fiscal 2028 revenue at roughly $673 billion. That would put Nvidia ahead of Apple (AAPL) and Alphabet (GOOGL) and behind only Amazon (AMZN) among U.S. tech companies by revenue.
What Is Driving Nvidia’s Confidence in 70% Growth?
Huang said the growth is coming from a much broader group of customers than in the early stages of the AI boom. Hyperscalers, neoclouds, sovereign clouds and enterprises are all increasing AI computing use.
AI models are also becoming more complex, which requires more computing power. “Demand is accelerating,” Huang said after the results. He pointed to more AI labs and startups, and physical AI as additional demand drivers.
Nvidia also has more products coming to market. Huang said the upcoming Vera Rubin platform is expected to be the company’s fastest-ramping product yet. That could give Nvidia another source of growth as customers expand their AI infrastructure.
Nvidia is also spending more to secure the components needed to meet that demand. Its supply commitments more than doubled to $279 billion in the latest quarter from $119 billion previously. Much of the increase was related to memory procurement.
Memory Costs Are Creating a Near-Term Problem
Nvidia said higher memory costs are putting pressure on its gross margins. Gross margin was 75% in fiscal Q2, but the company expects it to fall to 74% in Q3.
Looking further ahead, Nvidia expects margins to drop to 71% to 72% in Q4 FY27. They are then expected to come in at 72% to 73% in fiscal 2028 as the company’s planned price increases take effect.
CFO Colette Kress said Nvidia is seeing “extreme pricing conditions in memory.” She said higher component costs led the company to reset its margin expectations. Even with those supply pressures, demand remains strong. Huang said, “Even though our demand is much greater than 70%, our supply allows us to confidently deliver 70%.”
Huang’s comment also shows why Nvidia can still target 70% growth despite its current size. Customer demand is running above what the company can currently supply, leaving room for higher shipments as Nvidia secures more components and expands its capacity.
What Is a Price Target for NVDA Stock?
Turning to Wall Street, analysts have a Strong Buy consensus rating on Nvidia stock based on 28 Buys assigned in the past three months. Furthermore, the average Nvidia price target of $305.09 per share implies 45.52% upside potential.
