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What is the story about?
Nvidia shares surged on Thursday, August 27, after the chipmaker offered an unusually bullish long-term revenue outlook, strengthening investor confidence that the artificial-intelligence infrastructure boom still has room to run.
The stock jumped 7% at the open, adding about $359 billion to Nvidia's market value. Shares were up 7.8% at $226.12 as of 10:28 a.m. EDT, extending their post-earnings rally.
The optimism spilled across the semiconductor sector. Micron Technology rose 4.5%, Marvell Technology gained 5.7%, Arm Holdings climbed 4.7%, Intel advanced 3% and Advanced Micro Devices added 1.7%. AI-focused cloud companies Nebius and CoreWeave rose about 7.5% and 6%, respectively.
The catalyst was Nvidia's view of where its business could be a year from now.
Chief Financial Officer Colette Kress said Nvidia expects revenue to grow 70% in fiscal 2028, which runs from February 2027 through January 2028. Chief Executive Jensen Huang went further, saying underlying demand was “much greater than 70%”, with supply constraints limiting how much Nvidia can actually sell, CNBC reported.
Those constraints haven't disappeared. Nvidia's main manufacturing partner, Taiwan Semiconductor Manufacturing Co., continues to face capacity limitations, while shortages of memory chips used in Nvidia's systems are also restricting supply.
Nvidia says AI demand has reached an ‘inflection point’
Huang said Nvidia had never previously given a revenue forecast a year in advance but now has enough visibility across its supply chain to do so.
He described AI as having reached an “inflection point”, arguing that demand is broadening beyond the handful of technology giants that initially drove the infrastructure build-out.
“This time last year, one lab alone was driving the build-out,” Huang said. He pointed to the emergence of multiple frontier AI labs and startups, the spread of open-source models and the development of physical AI as new sources of demand.
That matters because one of the biggest questions hanging over the AI boom is whether today's extraordinary spending can continue.
Major technology companies are pouring hundreds of billions of dollars into data centres, chips and other AI infrastructure. Investors have increasingly questioned whether those investments will generate sufficient returns, while complex financing arrangements across the industry have added to concerns about how much of the boom ultimately depends on companies funding one another.
Nvidia's outlook offers a powerful counterargument: for now, the company at the centre of the AI spending boom sees demand continuing to outrun its ability to supply chips.
Nvidia is putting billions into its own customers
Nvidia isn't merely selling chips into the AI boom. It is increasingly investing in the companies building it.
The chipmaker has disclosed $99 billion in equity investments and committed another $25 billion, according to information provided by the company. It also has substantial credit-support commitments tied to AI infrastructure.
That growing web of investments has attracted scrutiny because Nvidia is effectively helping finance parts of the ecosystem that buy its products.
Huang defended the strategy, describing investments in leading AI developers such as Anthropic and OpenAI as a “once in a generation opportunity”.
His regret, he said, was that Nvidia hadn't invested “more and sooner”. Huang added that both companies could eventually go public.
$12.9 billion Hugging Face deal widens Nvidia's AI bet
Nvidia is also looking to extend its reach beyond the chips powering AI models.
The company has agreed to acquire AI platform Hugging Face for $12.9 billion, according to The Information, in what would rank among Nvidia's largest acquisitions.
Reuters reported that the deal would give Nvidia control of one of the most widely used platforms for hosting and sharing open-source AI models and datasets, pushing the company deeper into the software and developer side of the AI ecosystem.
The price also underscores how aggressively Nvidia is willing to spend.
Hugging Face is generating about $150 million in annualised revenue, up from roughly $100 million a few months earlier, according to The Information. At $12.9 billion, Nvidia would be paying roughly 86 times annualised revenue.
Nvidia was already an investor in Hugging Face. It participated in a $235 million funding round in 2023 that valued the startup at $4.5 billion, Reuters reported.
The acquisition could also strengthen Nvidia's relationship with AI developers at a time when some of its biggest customers and partners, including OpenAI and Anthropic, are exploring alternatives to Nvidia's chips.
The AI boom — and Nvidia's exposure to it — keeps getting bigger
Nvidia's growing investments, acquisitions and financial commitments mean the company is becoming more deeply embedded across virtually every layer of the AI build-out.
That creates a tension investors are increasingly watching. Nvidia is benefiting enormously from the billions being spent on AI infrastructure, while at the same time committing more of its own capital to the companies and projects driving that spending.
For Thursday's market, however, the message that mattered was simpler: Nvidia still sees far more demand for AI computing than it can currently supply.
And for investors worried that the AI boom might be running out of road, a forecast for 70% growth a year ahead was enough to send Nvidia — and much of the AI trade — sharply higher.
Also Read: S&P maintains India at ‘BBB’; fiscal consolidation key to next rating move
The stock jumped 7% at the open, adding about $359 billion to Nvidia's market value. Shares were up 7.8% at $226.12 as of 10:28 a.m. EDT, extending their post-earnings rally.
The optimism spilled across the semiconductor sector. Micron Technology rose 4.5%, Marvell Technology gained 5.7%, Arm Holdings climbed 4.7%, Intel advanced 3% and Advanced Micro Devices added 1.7%. AI-focused cloud companies Nebius and CoreWeave rose about 7.5% and 6%, respectively.
The catalyst was Nvidia's view of where its business could be a year from now.
Chief Financial Officer Colette Kress said Nvidia expects revenue to grow 70% in fiscal 2028, which runs from February 2027 through January 2028. Chief Executive Jensen Huang went further, saying underlying demand was “much greater than 70%”, with supply constraints limiting how much Nvidia can actually sell, CNBC reported.
Those constraints haven't disappeared. Nvidia's main manufacturing partner, Taiwan Semiconductor Manufacturing Co., continues to face capacity limitations, while shortages of memory chips used in Nvidia's systems are also restricting supply.
Nvidia says AI demand has reached an ‘inflection point’
Huang said Nvidia had never previously given a revenue forecast a year in advance but now has enough visibility across its supply chain to do so.
He described AI as having reached an “inflection point”, arguing that demand is broadening beyond the handful of technology giants that initially drove the infrastructure build-out.
“This time last year, one lab alone was driving the build-out,” Huang said. He pointed to the emergence of multiple frontier AI labs and startups, the spread of open-source models and the development of physical AI as new sources of demand.
That matters because one of the biggest questions hanging over the AI boom is whether today's extraordinary spending can continue.
Major technology companies are pouring hundreds of billions of dollars into data centres, chips and other AI infrastructure. Investors have increasingly questioned whether those investments will generate sufficient returns, while complex financing arrangements across the industry have added to concerns about how much of the boom ultimately depends on companies funding one another.
Nvidia's outlook offers a powerful counterargument: for now, the company at the centre of the AI spending boom sees demand continuing to outrun its ability to supply chips.
Nvidia is putting billions into its own customers
Nvidia isn't merely selling chips into the AI boom. It is increasingly investing in the companies building it.
The chipmaker has disclosed $99 billion in equity investments and committed another $25 billion, according to information provided by the company. It also has substantial credit-support commitments tied to AI infrastructure.
That growing web of investments has attracted scrutiny because Nvidia is effectively helping finance parts of the ecosystem that buy its products.
Huang defended the strategy, describing investments in leading AI developers such as Anthropic and OpenAI as a “once in a generation opportunity”.
His regret, he said, was that Nvidia hadn't invested “more and sooner”. Huang added that both companies could eventually go public.
$12.9 billion Hugging Face deal widens Nvidia's AI bet
Nvidia is also looking to extend its reach beyond the chips powering AI models.
The company has agreed to acquire AI platform Hugging Face for $12.9 billion, according to The Information, in what would rank among Nvidia's largest acquisitions.
Reuters reported that the deal would give Nvidia control of one of the most widely used platforms for hosting and sharing open-source AI models and datasets, pushing the company deeper into the software and developer side of the AI ecosystem.
The price also underscores how aggressively Nvidia is willing to spend.
Hugging Face is generating about $150 million in annualised revenue, up from roughly $100 million a few months earlier, according to The Information. At $12.9 billion, Nvidia would be paying roughly 86 times annualised revenue.
Nvidia was already an investor in Hugging Face. It participated in a $235 million funding round in 2023 that valued the startup at $4.5 billion, Reuters reported.
The acquisition could also strengthen Nvidia's relationship with AI developers at a time when some of its biggest customers and partners, including OpenAI and Anthropic, are exploring alternatives to Nvidia's chips.
The AI boom — and Nvidia's exposure to it — keeps getting bigger
Nvidia's growing investments, acquisitions and financial commitments mean the company is becoming more deeply embedded across virtually every layer of the AI build-out.
That creates a tension investors are increasingly watching. Nvidia is benefiting enormously from the billions being spent on AI infrastructure, while at the same time committing more of its own capital to the companies and projects driving that spending.
For Thursday's market, however, the message that mattered was simpler: Nvidia still sees far more demand for AI computing than it can currently supply.
And for investors worried that the AI boom might be running out of road, a forecast for 70% growth a year ahead was enough to send Nvidia — and much of the AI trade — sharply higher.
Also Read: S&P maintains India at ‘BBB’; fiscal consolidation key to next rating move
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