AI Demand and Datacenter Momentum to Lift NVIDIA's Q2 Earnings

NVIDIA Corporation NVDA is set to report its second-quarter fiscal 2026 earnings on Aug. 27, and expectations are high.

NVIDIA has become the face of the artificial intelligence (AI) revolution, with its chips powering everything from large language models to enterprise AI tools. With demand for AI infrastructure still climbing and businesses committing more capital to generative AI, NVIDIA is likely to post another strong quarter.

Click here to know how NVDA’s overall fiscal second-quarter results are likely to be.

AI Demand Creates a Strong Tailwind for NVIDIA

Generative AI is changing how businesses work, creating huge demand for computing power. Whether it's chatbots like ChatGPT, AI content tools or medical research, companies are using AI more than ever, and most of that AI work runs on NVIDIA’s hardware.

The global generative AI market is expected to grow rapidly. Research from Fortune Business Insights estimates the market will reach $967.65 billion by 2032, expanding at a CAGR of 39.6%. This growth helps explain why NVIDIA is seeing such strong results.

NVIDIA’s chips are used across many industries, including healthcare, automotive, manufacturing and cybersecurity, to power things like digital assistants, smart recommendations and language translation. As more businesses add AI tools, NVIDIA’s products are becoming even more important.

Datacenter Growth Is Still the Key Driver for NVDA

NVIDIA’s datacenter business has been a major reason for its recent growth. In the first quarter of fiscal 2025, the segment grew 73% year over year and 10% sequentially to $39.1 billion.

This strong trend is expected to continue. Our model projects second-quarter datacenter revenues to hit $40.19 billion, indicating an approximately 53% year-over-year increase and a 3% sequential rise. This growth projection is mainly because companies and cloud providers are investing heavily in AI, and they rely on NVIDIA’s GPUs to build and run AI systems.

NVIDIA’s latest chip designs, Hopper, Ampere and Blackwell, are powering many AI applications, from training large models to providing quick responses in real time. Big tech companies like Microsoft, Amazon and Google continue to use NVIDIA chips in their AI products and services, helping keep demand high.

What to Expect From NVIDIA’s Q2 Results?

NVIDIA expects second-quarter fiscal 2026 revenues to reach $45 billion (+/-2%), underscoring the broad-based strength of AI adoption. This represents a remarkable leap from prior years, as more businesses allocate significant capital toward AI-driven growth initiatives. The Zacks Consensus Estimate is pegged at $46.14 billion, which indicates a whopping 53.6% increase from the year-ago reported figure.

The consensus mark for the second-quarter EPS is pegged at $1.00, implying a year-over-year surge of 47%. It surpassed the Zacks Consensus Estimate for earnings three times in the trailing four quarters while missing on one occasion, the average surprise being 3.9%.

NVDA’s Zacks Rank and Stocks to Consider

Currently, NVIDIA carries a Zacks Rank #3 (Hold).

Arista Networks ANET, F5 FFIV and Qualys QLYS are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Arista Networks, F5 and Qualys each sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Arista Networks’ 2025 earnings has been revised upward by 25 cents to $2.81 per share over the past 30 days and suggests a year-over-year decrease of 23.8%. Arista Networks shares have jumped 54.7% over the past year.

The Zacks Consensus Estimate for F5’s fiscal 2025 earnings has moved upward by 5.4% to $15.38 per share in the past 30 days, indicating 15% year-over-year growth. F5 shares have soared 59.1% in the trailing 12 months.

The Zacks Consensus Estimate for Qualys’ 2025 earnings has been revised upward by 18 cents to $6.35 per share in the past 30 days, suggesting a year-over-year increase of 3.6%. Qualys shares have gained 7.5% over the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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