Nvidia Just Did Something It’s Never Done Before. Here’s Why It Makes the Stock a Buy.

No slowing down

The law of large numbers is still not catching up with Nvidia, as the company’s fiscal Q2 revenue growth accelerated to an eye-popping 106%, coming in at $96.2 billion. That’s up from 85% growth in fiscal Q1, 73% growth in Q4 2025, 62% growth in Q3 2025, and 56% growth in Q2 2025.

Adjusted earnings per share (EPS), meanwhile, skyrocketed 120% to $2.22 from $1.01. The results easily topped analyst expectations for adjusted EPS of $2.09 on sales of $92.3 billion.

Data center segment revenue once again led the way, up 117% year over year to $89 billion. Nvidia’s smaller edge computing segment, meanwhile, saw revenue rise 27% to $7.2 billion.

Within its data center segment, hyperscaler revenue soared 102% to $48.7 billion, helped by these companies’ large AI infrastructure buildouts. AI cloud, industrial, and enterprise (ACIE) revenue, meanwhile, skyrocketed 138% to $40.3 billion. It said the growth was driven by neocloud expansions to meet rising enterprise, sovereign, and AI-start-up demand. It said it has nearly 20 customers that contribute $1 billion or more in annual recurring revenue.

Nvidia highlighted the strength of its ecosystem and new products as a big differentiator. Its networking business once again shone, with Spectrum-X Ethernet revenue growing 2.6 times year over year. Meanwhile, it expects its central processing unit (CPU) revenue to double in fiscal 2028, while Groq 3 LPX, its first rack-scale language processing unit (LPU) system built for inference, is in full production.

The company continues to throw off a huge amount of cash, with operating cash flow of $24.1 billion and free cash flow of $21.4 billion in the quarter. It ended the period with cash and marketable securities of $99.3 billion and $32.4 billion in debt. It also has $51.2 billion in non-marketable securities, which are its investments in non-public companies.

Looking ahead, Nvidia guided for fiscal Q3 revenue to come in around $108 billion, which would represent 89% growth. The growth will be led by the ACIE segment, with hyperscaler revenue picking up in fiscal Q4 and into fiscal 2028. What really shocked investors, though, was that the company projected revenue to grow by 70% in fiscal 2028, well above the 44% growth analysts have been projecting, while saying growth would be higher if not for supply constraints.

See also  1 Top Growth Stock Down 22% This Year and Built for the Long Haul

Image source: The Motley Fool.

The stock is still a buy

Nvidia continues to demonstrate why it’s one of the best companies on the planet. It’s much more than just a graphics processing unit (GPU) designer nowadays, becoming a complete AI infrastructure solutions provider with leading networking, CPU, and other chips that it can combine to create end-to-end AI server racks for specific AI tasks, including inference, agentic AI, and AI model training.

Notably, this quarter was the first time Nvidia has ever given a forecast a year in advance, speaking to the long-term visibility the company is seeing. CEO Jensen Huang also noted that demand is more broad-based and that the AI ecosystem is healthier than a year ago, as OpenAI is no longer the only force driving the AI infrastructure buildout, with multiple frontier model labs scaling up and a thriving open-model ecosystem, as well.

Despite its remarkable growth and increasing visibility, Nvidia’s stock is still attractively valued, trading at a forward price-to-earnings (P/E) ratio of around 17 times based on the fiscal 2028 analyst consensus, with estimates likely to go up. Between its growth, valuation, and improving visibility, Nvidia is a must-own AI semiconductor stock.