NVIDIA’s second-quarter (Q2) results exceeded expectations, and its revenue guidance for the next financial year beat estimates. But experts say the chipmaker now faces a tougher challenge; rising costs and pressure on profit margins could test how long its AI-fuelled growth can continue.
The chipmaker’s revenue for the July quarter more than doubled to $96.2 billion, while adjusted profit came in at $2.22 per share. The momentum is expected to remain strong over the next year, with the company targeting a 70% increase in revenue in 2028.
Following the results, Nvidia shares rose as much as 7.6% to $225.50 after trading got underway in New York on Thursday, adding about $362 billion in market value. The stock was already up 12% this year through Wednesday’s close. A bullish outlook also lifted broader US stocks, boosting investor confidence that the AI spending boom still has further to run.
NVIDIA would grow even faster if it had access to more supplies, Chief Financial Officer Colette Kress said during a post-earnings conference call. “Incredibly, we are seeing demand acceleration even at our scale,” she said. “Customers’ forecasts point to our growth doubling next year.”
Nvidia’s AI boom faces a new challenge
Nvidia delivered sales above Wall Street estimates for 16 straight quarters, helping its stock surge more than 1,000% in three years and turning it into the world’s most valuable company. But now investors have gotten harder to impress. The chip giant has had a considerably slower year in 2026. Its shares are up just 12% so far, with investors questioning the huge amounts Big Tech is spending on data centres. There are also concerns that Nvidia may have helped push up AI valuations by investing in some of the companies that buy its chips.
And Viram Shah, Founder & CEO of Vested Finance, points out that the road gets even tougher from here. “The headline numbers are great, no question. $96 billion in revenue, up 106% from last year. But the key insight this quarter is on the cost side.”
The only companies in the semiconductor industry that rival Nvidia’s revenue run-up are the memory-chip makers: Samsung Electronics Co., SK Hynix Inc. and Micron Technology Inc. Training and running AI software requires a massive amount of computer memory, which has fueled growth but also placed a huge strain on their factories. While they’re expanding capacity, the companies don’t expect to catch up with demand for years. The shortages caused the price of memory chips to soar.
Shah points out that this is exactly what is hurting Nvidia’s profit margins and predicts they will fall from 75% to around 71–72% by January.
“And look at their response: supply commitments jumped from $119 billion to $279 billion in three months, mostly to lock up memory.”
Now, Nvidia may have to raise prices next year to protect its profits. The big question is whether customers will accept those higher prices or push back. That will determine what happens to Nvidia’s margins next year, Shah concludes.
