Chipmaker beats quarterly estimates and raises outlook, but investors now expect more than simply strong numbers from the AI bellwether
Nvidia shares rebounded sharply after initially slipping in extended trading following the chipmaker’s latest quarterly results, underscoring just how high investor expectations have risen around the artificial intelligence boom.
Nvidia beat Wall Street estimates for its second quarter and raised its revenue outlook for the current quarter. Data centre revenue surged 117 per cent from a year earlier to $89 billion, while the company forecast third-quarter revenue of about $108 billion, plus or minus 2 per cent.
The strong numbers initially failed to impress investors, with Nvidia shares opening lower after the results and remaining little changed during the first part of the post-market session.
Sentiment shifted during the company’s earnings call, however, after CEO Jensen Huang said AI had reached an “inflection point”. Nvidia executives also indicated that the company expects fiscal 2028 revenue to grow by 70 per cent.
The shares subsequently gained 4.2 per cent in heavy trading, with more than 50 million shares changing hands, according to LSEG data.
“It’s hard to interpret the report as anything less than amazing,” said Seth Hickle, chief investment officer at Mindset Wealth Management, which owns Nvidia shares and put options.
More from BusinessNvidia remains the AI market bellwether
Nvidia has become the leading gauge of investor enthusiasm for artificial intelligence because its chips power major data centres and advanced AI models around the world.
The company’s latest results come as major technology firms continue to ramp up spending on AI infrastructure. Microsoft and Meta Platforms, among Nvidia’s largest customers, have helped drive expectations that Big Tech companies will spend more than $730 billion on AI infrastructure this year, up sharply from roughly $400 billion in 2025.
Nvidia has been one of the biggest beneficiaries of the AI-driven stock market rally, with its shares climbing about 1,700 per cent over the past four years and turning the semiconductor company into the world’s most valuable listed firm.
Yet its performance this year has lagged behind other chipmakers viewed as beneficiaries of the AI data centre buildout. Nvidia shares are up more than 12 per cent year to date, compared with a gain of more than 60 per cent for the Philadelphia Semiconductor Index.
Investors demand more than a strong beat
The latest results also come against growing investor concerns about the way the AI boom is being financed.
Some market participants have raised questions about so-called circular deals involving AI companies, chipmakers and financiers. Critics argue that such arrangements could exaggerate underlying demand and increase the risk of a sharp market correction.
Nvidia said its maximum gross exposure under land, power and shell guarantee agreements was $3.5 billion, a relatively small amount compared with its quarterly revenue.
For AI investors, the bigger question is whether Nvidia’s results can reignite the broader technology trade.
“It’s positive news for the AI sector,” said Chuck Carlson, chief executive of Horizon Investment Services, which owns Nvidia shares. He added that it remained uncertain whether the results would be enough to reverse the current market rotation away from some AI stocks.
Nvidia has now beaten analyst estimates for eight consecutive quarters. Ahead of the latest results, options markets had been pricing in a potential 5.4% move in either direction when shares resumed trading on Thursday.
For investors, that highlights the extraordinary expectations surrounding the company: beating forecasts is increasingly viewed not as a surprise, but as the minimum requirement.
“The challenge for Nvidia isn’t delivering good numbers anymore; it’s delivering better than the great numbers investors already expect,” Hickle said.
