Nvidia reported record adjusted quarterly earnings per share (EPS) of $2.22 for the second quarter (Q2) of its 2027 financial year following market close on 26 August – 5.7% above analysts forecasts of $2.1, and 120% higher compared to the same period last year.

Quarterly revenue was $96.2 billion, 4.4% above the $92.2 billion analysts polled by London Stock Exchange Group (LSEG) had forecast and representing a 106% year-on-year increase.

“Nvidia’s (NASDAQ:NVDA) results show that the artificial intelligence (AI) boom is not running out of demand,” said Lale Akoner, global market strategist at investment platform eToro. “The constraint is increasingly the industry’s ability to supply and finance the infrastructure required.”

The results sent Nvidia’s share price surging in after-hours trading. As of 9.45am BST on 27 August the shares had risen around 7.5% from the previous day’s close.

“AI has reached its inflection point,” said Jensen Huang, founder and CEO of Nvidia. “It’s doing useful work. Its tokens are productive and profitable.”

Nvidia’s results in detail

There were more positives for investors throughout Nvidia’s results.

Revenue for the Data Center division – the largest and most closely-watched of Nvidia’s business arms as it contains all of the AI hardware elements – beat expectations at $89 billion, up 117% year-on-year.

Nvidia’s gross margin increased from 72.5% a year ago to 75.0% in the latest quarter.

“Nvidia remains the main toll collector on big tech’s enormous AI budgets, capturing a large share of each new round of infrastructure spending,” said eToro’s Akoner.

Nvidia also issued Q3 revenue guidance of $108 billion (plus or minus 2%) – higher than the $105.1 billion that LSEG’s poll had projected.

“Blackwell Ultra drove the quarter, while Vera Rubin is already entering production,” said Akoner. “This smooth handover suggests the AI hardware upgrade cycle is accelerating without the pause some investors feared.”

How did other stocks respond to Nvidia’s results?

While growing demand for Nvidia’s products is a positive for the AI boom in general, it could be seen as a headwind for the companies that are reliant on buying them.

Alphabet fell 0.4% overnight, while Meta Platforms and Amazon both fell around 0.2%.

These are not large shifts, and could be due to other factors besides Nvidia’s results. But many are starting to question whether the so-called hyperscalers will ever recoup the hundreds of billions of dollars they are pouring into AI infrastructure.

“Once the initial excitement settles, questions are likely to resurface about the durability of this boom in revenues,” said Susannah Streeter, chief investment strategist at wealth manager Wealth Club. “It’s becoming less about whether Nvidia can keep climbing the AI mountain, and more about how long it can sustain this extraordinary pace of ascent and whether the vast sums being poured into AI infrastructure will ultimately deliver the returns needed to justify the colossal investment.’’

Higher costs for memory chips could also become a headwind for Nvidia in due course, according to Akoner.

“Rising memory costs are expected to push gross margins down from 75% to 71%-72%,” she said. “Nvidia’s ability to raise prices should help margins recover, showing considerable pricing power, but it cannot escape supply pressures entirely.”