TL;DR
NVIDIA's second-quarter revenue and earnings per share both exceeded expectations, with data center revenue rising 117% year-over-year, indicating that demand for AI computing power has not significantly cooled.
After Rubin began contributing revenue, Bernstein expects NVIDIA’s revenue for the next fiscal year to approach $700 billion, representing a year-over-year growth of approximately 70%, an increase of nearly 30% from its previous forecast.
Rising memory prices will pressure short-term gross margins, but the expected decline is only a few percentage points—insufficient to alter the profit growth trajectory.
NVIDIA has secured $279 billion in supply-related commitments, with funding and procurement capabilities being converted into a production advantage, further widening the gap with competitors.
Bernstein raised its price target from $315 to $400, implying approximately 91% upside potential, but the valuation depends on Rubin’s successful ramp-up and relief of supply bottlenecks.

NVIDIA delivered another beat on its earnings report, but Bernstein believes the truly important part of this performance lies not in the already realized second fiscal quarter, but in the company’s outlook for the next product cycle and demand for the calendar year 2027.

In a report released on August 27, Bernstein raised NVIDIA’s price target from $315 to $400 and maintained an “Outperform” rating. The firm also significantly increased its fiscal 2028 revenue forecast from $539.6 billion to $690.3 billion and raised its non-GAAP earnings per share forecast for the same period from $12.52 to $15.80.

The core rationale for this upward revision is that demand for Blackwell continues to grow rapidly, while Rubin has begun entering a phase of substantial volume ramp-up. Bernstein believes that Rubin could drive NVIDIA into its largest product cycle in company history.

Data center revenue approached $90 billion in a single quarter.

NVIDIA reported second-quarter revenue of $96.221 billion, exceeding the market expectation of $92.293 billion and surpassing the company’s prior guidance of $9.1 billion; non-GAAP earnings per share came in at $2.22, higher than the market expectation of $2.09.

The upside primarily came from the data center business, which generated revenue of $89.023 billion, representing an 18% sequential increase and an 117% year-over-year growth, exceeding the market expectation of $85.949 billion.

Of this, revenue from hyperscale cloud providers amounted to $48.71 billion, representing a 13% sequential increase and a 102% year-over-year increase; revenue from AI cloud, industrial, and enterprise customers reached $40.313 billion, up 25% sequentially and 138% year-over-year. This indicates that NVIDIA’s growth is not solely dependent on a few large technology companies, as demand from AI cloud providers and enterprise customers is also accelerating.

The "edge computing" segment, comprising gaming, professional visualization, automotive, and other businesses, generated revenue of $7.198 billion, representing a 13% sequential increase and approximately a 28% year-over-year growth, also exceeding market expectations.

Profitability remained largely stable. The non-GAAP gross margin for the second fiscal quarter was 75%, in line with guidance and market expectations; the non-GAAP operating profit margin reached 66.5%, up approximately 0.6 percentage points sequentially.

Rubin is seeing increased volume; the next quarter's data center revenue could surpass $10 billion.

NVIDIA's midpoint guidance for third-quarter revenue is $108 billion, above the market expectation of $104.6 billion; according to Bernstein's calculations, the implied non-GAAP earnings per share are approximately $2.46, also exceeding the market expectation of $2.36.

The approximately $12 billion in sequential revenue growth is expected to come mostly from the data center business. Bernstein estimates that NVIDIA’s data center revenue for the third fiscal quarter could exceed $100 billion, with Rubin contributing about 20%.

This means Rubin is no longer just a future product expectation but has begun to materially impact current revenue. Blackwell is still in its growth phase, while Rubin is now ramping up, causing demand for both platforms to overlap in the short term.

More importantly, NVIDIA significantly raised its growth outlook for fiscal year 2028, which encompasses most of the calendar year 2027. Based on management’s estimated growth rate of approximately 70%, the company’s full-year revenue could reach $680 billion to $700 billion.

Bernstein previously estimated NVIDIA's fiscal year 2028 revenue at $539.6 billion and has now raised the forecast to $690.3 billion, an increase of nearly 28%; the fiscal year 2029 revenue forecast has also been raised from $623 billion to $954.1 billion.

The report notes that this outlook remains constrained by supply capacity. Management believes that if supply of key components such as memory and wafers improves further, existing demand could be sufficient to support revenue doubling year-over-year. However, this is an assessment of demand potential and not an official revenue guidance from the company.

Gross profit margin is under pressure, but the profit logic remains intact.

Gross margin was the relatively weaker component of this earnings report compared to revenue prospects.

NVIDIA expects its non-GAAP gross margin for the third fiscal quarter to be approximately 74%, below the market expectation of 74.8%; it may further decline to 71%–72% in the fourth fiscal quarter, primarily due to rising memory prices. As product price adjustments gradually take effect, the company anticipates its gross margin to recover to 72%–73% in the next fiscal year, though still below its previous outlook of approximately 75%.

In Bernstein’s view, gross margin pressure has been confirmed, but its impact remains manageable. Amid a clear rise in memory costs, NVIDIA’s gross margin declined by only a few percentage points, indicating the company still possesses strong pricing power.

According to Bernstein's latest forecast, NVIDIA's non-GAAP earnings per share for fiscal year 2028 will reach $15.80, up 26% from the previous estimate; the forecast for fiscal year 2029 has been raised from $14.81 to $22.28 per share.

In other words, a decline in gross margin may reduce the profit elasticity from some revenue growth, but with rapid expansion in revenue scale, overall profitability is still expected to increase significantly.

$279 billion in supply commitments, balance sheet becomes another moat

As investment in AI infrastructure expands, NVIDIA's primary constraint is shifting from orders to supply.

By the end of the second fiscal quarter, the company’s supply-related commitments had surged from $119 billion in the previous quarter to $279 billion; when including cloud service agreements, data center leases, and equity investments, total related commitments reached $366 billion.

NVIDIA's inventory increased to $31.575 billion, with inventory days rising from approximately 114 to 118 days. Bernstein believes this primarily reflects the company's proactive inventory buildup in preparation for the launch and scaling of the Vera Rubin platform.

The report further states that NVIDIA’s balance sheet is becoming a competitive barrier as significant as its technological strength. Multi-billion-dollar supply commitments enable the company to secure access to memory, wafers, packaging, and other critical resources in advance, while also investing in cloud infrastructure and ecosystem partners.

For smaller competitors, even with access to viable chip designs, it is extremely difficult to replicate this level of procurement capability and supply chain control. As a result, competition in AI chips is no longer limited to individual chip performance—it now also encompasses capital, production capacity, system delivery, and ecosystem expansion capabilities.

$400 price target still depends on whether high growth can be realized.

Bernstein raised NVIDIA's price target from $315 to $400, based on an average non-GAAP EPS of $19.04 for fiscal years 2028 and 2029, applying a P/E multiple of approximately 21. The increase in the price target was primarily driven by a significant upward revision in earnings forecasts, rather than an expansion in the valuation multiple, which decreased from 25 previously.

Based on the closing price of $209.66 on August 26, the $400 target price represents approximately a 91% potential upside.

However, this pricing is based on several key assumptions: Rubin can ramp up as planned, the supply chain can support rapid growth, memory price increases will not continue to erode gross margins, and major cloud providers remain willing to sustain high levels of AI capital expenditure.

Bernstein’s key conclusion is that NVIDIA’s recent stagnant stock performance does not indicate that the growth cycle has peaked. As Rubin begins to contribute revenue, market forecasts for 2027 calendar-year earnings may face concentrated upward revisions. The true determinant of NVIDIA’s stock upside will shift from whether demand exists to whether NVIDIA can secure sufficient supply to convert its massive orders into revenue.