AI chip giant Nvidia delivered a blockbuster earnings report on Wednesday that surprised the market. For the second quarter of fiscal 2027 (ended July 26, 2026), the company posted record revenue of $96.22 billion, up 106% year-over-year, and net income of $59.69 billion, up 126% year-over-year, both easily surpassing market expectations. However, even as results grew explosively, the stock’s valuation fell to its lowest level since 2019 — with its price-to-earnings ratio dipping below 27 times.
Data Center Leads the Way, Accounting for Over 90% of Revenue
As Nvidia’s absolute core growth engine, the data center segment contributed $89 billion in quarterly revenue, up 117% year-over-year and 18% sequentially, accounting for 92.5% of total revenue. Breaking it down further, Hyperscale customers generated $48.71 billion, while AI Cloud, Industrial & Enterprise (ACIE) customers contributed $40.31 billion, with the latter growing 138% year-over-year.
Notably, Nvidia has restructured its business into two reporting segments — “Data Center” and “Edge Computing” — with the latter generating $7.2 billion in quarterly revenue, up 27% year-over-year. This structural adjustment suggests that the 92.5% data center concentration is not a temporary phenomenon but a direct reflection of the company’s strategic focus.
CEO Jensen Huang made it clear during the earnings call: “AI has reached its inflection point. It’s doing useful work. Its tokens are productive and profitable. Now, compute is revenue. And demand is accelerating.”
AWS Adds Another 2 Million GPUs as Cloud Giants’ Arms Race Continues
On the same day as the earnings release, Nvidia announced an expanded collaboration with Amazon Web Services (AWS). AWS will deploy an additional 2 million Nvidia GPUs between Q2 FY2027 and Q2 FY2029, while also adopting Nvidia’s new Vera CPUs. Some Vera CPUs will be integrated with the upcoming Rubin AI chips, while others will be deployed independently.
This move broke market concerns that “Hyperscaler capital expenditures have peaked.” Nvidia CFO Colette Kress revealed that the combined capital expenditures of the top five Hyperscalers are expected to rise from $800 billion in 2026 to $1.3 trillion in 2027.
Valuation at New Lows: Profits Double, P/E Gets “Discounted”
Despite profit doubling, Nvidia’s stock closed Wednesday’s regular trading session at $209.66, down 1.59%, with a market capitalization of approximately $5.07 trillion. Based on adjusted earnings per share of $2.22, the valuation has fallen to its lowest level since early 2019. In after-hours trading, however, the stock rose more than 4%, buoyed by the earnings report and forward guidance.
Outlook: Supply Remains a Bottleneck, FY2028 Guidance Shines
For the third quarter, Nvidia expects revenue of approximately $108 billion (plus or minus 2%), representing year-over-year growth of about 89%, above the consensus estimate of $104.20 billion. However, this guidance does not include revenue from data center computing business in China.
Kress further provided rare forward-looking guidance during the call: revenue for fiscal 2028 is expected to grow approximately 70%, and this outlook remains supply-constrained — if supply chain constraints ease, growth could be even higher. The Vera Rubin platform entered full production this quarter, with deployment scope continuing to expand.
Revenue doubling, yet valuation falling to the lowest level in six years, alongside cloud giants ramping up procurement that provides strong endorsement for long-term demand — what lies before investors is a rare contradictory combination: the strongest fundamental performance in history, paired with the most “discounted” pricing in recent memory.
