Nvidia Stock Drops 1.6% Despite $96.2B Revenue Beat on August 27

Nvidia reported record second-quarter revenue of $96.2 billion, up 106% from a year ago, and beat analyst expectations on earnings per share at $2.22 versus $2.09 forecast. The chip maker guided for Q3 revenue between $105.8 billion and $110.1 billion and projected 70% revenue growth for fiscal 2028. Despite the blockbuster results, the stock fell 1.6% to $209.66 on August 27 as investors digested slower growth rates ahead and supply bottlenecks.

Record revenue masks slowing growth outlook

Nvidia’s $96.2 billion Q2 revenue crushed the $92.3 billion Wall Street estimate, but the guidance revealed a deceleration. Year-over-year growth reached 106% in Q2, the fifth consecutive quarter of acceleration, yet Q3 guidance points to growth in the mid-to-high 80% range. CEO Jensen Huang acknowledged supply constraints: “Our demand is much higher than that,” he told analysts, signaling the company cannot fully meet orders. The gross margin held steady at 75%, meeting expectations.

Data center dominance and Vera Rubin ramp

Data center revenue hit $89 billion, up 117% year-over-year and beating the $85.8 billion forecast. CFO Colette Kress said hyperscale revenue more than doubled and enterprise revenue rose 138%. Vera Rubin, the next-generation chip architecture now in full production, is expected to mark the fastest product ramp in Nvidia’s history and account for about 20% of data center revenue in Q3. Kress told investors the company has received orders from every major hyperscaler and AI cloud provider.

Amazon partnership and China headwinds

Nvidia and Amazon Web Services announced plans to deploy 2 million additional GPUs in AWS infrastructure during 2027 and 2028. However, Nvidia warned it expects zero revenue from China sales due to US export restrictions, creating uncertainty in a once-significant market. The company also faces growing competition from Microsoft and Meta, which are investing heavily in custom chips to reduce dependence on Nvidia hardware.

Meyka grade and analyst consensus

Meyka rates Nvidia stock A- with a buy recommendation and a 12-month price target of $217.62, implying 3.7% upside from current levels. The consensus among 19 analysts is strong buy, with 17 buy ratings and 2 strong buy ratings. The stock trades at a 32.2x trailing P/E ratio, reflecting premium valuation despite the 106% revenue growth. Analyst Luke Lango noted the initial stock decline was not thesis-breaking, as the slowing growth outlook is manageable given the scale of the AI infrastructure buildout.

Final Thoughts

Nvidia’s record earnings and 70% fiscal 2028 growth forecast underscore AI’s staying power, yet the stock’s 1.6% drop reflects investor caution on decelerating growth and supply limits. With Meyka grading the stock A- and analysts overwhelmingly bullish, the risk-reward favors patient holders, though near-term volatility may persist.

FAQs

Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.