NVIDIA's Networking Revenues Double: Can It Keep the Momentum?

NVIDIA Corporation’s NVDA Networking business unit is becoming a critical growth engine as reflected in the company’s last reported financial results for the second quarter of fiscal 2026. Revenues from the Networking business almost doubled on a year-over-year basis and hit a record $7.3 billion in the second quarter, as customers continue to accelerate investments in AI data center infrastructure.

The robust growth reflects how essential low-latency and high-throughput connections are in scaling artificial intelligence (AI) workloads, especially as computing demands grow with reasoning and agentic AI models. Much of the momentum came from strong demand for Spectrum-X Ethernet and InfiniBand solutions.

Spectrum-X has gained traction with cloud providers looking for Ethernet-based AI networking that approaches the performance of InfiniBand while fitting existing infrastructure. At the same time, InfiniBand adoption is expanding among advanced model builders who prioritize the lowest latency and highest efficiency for AI training. NVIDIA also introduced Spectrum-XGS, a new solution designed to connect multiple AI factories, underscoring its ambition to shape large-scale AI networking.

The networking opportunity remains sizable. As hyperscalers and enterprises expand capacity, efficient interconnects can directly improve data center performance. NVIDIA’s integration of networking with its graphics processing units (GPUs) gives it a strong position in the AI data center infrastructure market. The Zacks Consensus Estimate for the Networking business unit is currently pegged at $33.74 billion, indicating year-over-year growth of approximately 160%.

How Competitors Fare Against NVIDIA in AI Networking Space?

NVIDIA faces competition from Broadcom Inc. AVGO and Arista Networks Inc. ANET in the AI networking space.

Broadcom has a strong presence in Ethernet switching and custom silicon. Its chips are widely used in large-scale data centers, and its partnerships with cloud service providers give it an edge in delivering networking tailored to specific workloads. As AI infrastructure expands, Broadcom’s focus on efficiency and integration could help it capture more market share.

Known for its high-performance Ethernet switches, Arista Networks has been gaining traction in AI-driven data centers. The company’s strength lies in building scalable, cloud-focused networking systems that can handle the massive data flows required by AI training and inference. While it does not provide GPUs like NVIDIA, Arista Networks’ role in ensuring smooth interconnectivity makes it an important competitor in this space.

NVIDIA’s Price Performance, Valuation and Estimates

Shares of NVIDIA have risen around 36.5% year to date compared with the Zacks Computer and Technology sector’s gain of 22.4%.

NVIDIA YTD Price Performance

From a valuation standpoint, NVDA trades at a forward price-to-earnings ratio of 32.96, higher than the sector’s average of 29.74.

NVIDIA Forward 12-Month P/E Ratio

The Zacks Consensus Estimate for NVIDIA’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 48.8% and 39.2%, respectively. Estimates for fiscal 2026 and 2027 earnings have been revised upward in the past 30 days.

NVIDIA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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