Nvidia (NVDA) is scheduled to report fiscal 2027 second-quarter earnings after the market closes on Aug. 26. Wall Street expects revenue to surge 97% year over year to $92.07 billion, with adjusted earnings per share of $2.09, up from $1.05 a year earlier. The company’s own guidance from May called for $91 billion, plus or minus 2%, implying roughly 95% growth. By almost any measure, these are outstanding numbers. Yet for Nvidia, outstanding may not be enough.
The growth engine remains the data center business. Demand for Nvidia GPUs used in artificial intelligence applications remains strong. CEO Jensen Huang has projected that total sales of Blackwell and Rubin GPUs will reach $1 trillion between 2025 and the end of calendar 2027, a figure that excludes any contribution from Vera Rubin CPUs.
The problem is not performance but expectation. Nvidia has beaten analyst estimates for 13 consecutive quarters. A beat is no longer news; it is the baseline embedded in the stock price. Over the past year, Nvidia shares have fallen after every quarterly report, with the decline often lasting a week or more, even when earnings topped forecasts, revenue growth accelerated, and guidance was raised. The stock later climbed back and typically traded higher by the next earnings date. This time could be different: unless shares rally early this week, Nvidia will enter the report below where it stood after the previous update.
Why does a strong report leave the market cold? One reason is the so-called whisper number, an unofficial earnings expectation that can run above the published consensus. Nvidia can deliver results above the official estimate but still fall short of that quieter, stricter bar. A more important factor is management commentary. Investors look forward, not backward. Even a blowout quarter can be overshadowed by cautious remarks about near-term prospects.
China sales will be a focus. Nvidia’s guidance explicitly excludes data center revenue from China. If executives signal optimism about AI chip sales in that market during the earnings call, the stock could get a lift. So far, no such signal has emerged.
More concerning is that the size of Nvidia’s beats is narrowing. In the second quarter of fiscal 2024, earnings came in 22.8% above the midpoint of the company’s guidance range. By the first quarter of fiscal 2027, the beat relative to consensus had shrunk to about 5.5%. When the market gets used to top marks, a high score becomes merely a passing grade, and a passing grade cannot surprise.
Another pressure comes from growing unease over AI infrastructure spending by hyperscalers. Investors are increasingly worried about the massive sums cloud providers and other tech companies are committing to expand computing capacity. In that climate, even strong quarterly results may not be enough to shake off negative sentiment.
Valuation offers some perspective. Nvidia trades at about 24 times current fiscal year earnings and 16 times next year’s target. The stock has gained about 23% over the past year, only slightly ahead of the broader market, while some smaller competitors, memory plays, and other AI-related businesses have fared better. Demand remains robust, and Nvidia remains the industry leader, but supply chain constraints and external risks are not within the company’s control.
Long-term shareholders have been richly rewarded over the years, and a single quarter will not change that. But in the near term, the market’s expectations for the chip giant have risen so high that excellence has become ordinary. Nvidia, the perennial top student, is now trapped in a harsh grading curve where scoring high is no longer enough.
