Earlier this month, a hotter-than-expected inflation report pushed Nvidia (NASDAQ:NVDA) down more than 3% in a single session, according to Yahoo Finance’s Ines Ferré. Investors worried about more interest rate hikes, which would raise borrowing costs for the companies building AI data centers. But the sell-off said little about Nvidia’s own results. In its fiscal second quarter, revenue reached $96.2 billion, up 106% from a year earlier, while data center sales alone grew 117%. So the open question is whether Nvidia’s customers can keep paying for chips, not whether they want them.
Nvidia sells the processors, networking gear and software that data centers use to train and run AI models. Its buyers include cloud providers and AI labs, so borrowing costs matter to its sales. The business looks stronger than the stock’s recent moves suggest, and the price already assumes a slowdown the second-quarter numbers don’t show. Investors who want more AI stocks can find Nvidia in our recent list 10 Best Future Stocks to Buy for the Next 5 Years.
Demand Now Comes From Many Buyers
Jensen Huang told investors that a year ago one lab drove much of the AI buildout. Today several frontier labs, startups and a growing open-model ecosystem are scaling at once. That wider base shows in the growth record. Revenue grew about 66.90% a year over the past five years, so the fiscal second quarter’s 106% means growth is speeding up, not fading.
Management expects the pace to hold, guiding fiscal third-quarter revenue to $108.0 billion, plus or minus 2%. That outlook leaves out data center compute sales to China entirely, so the forecast doesn’t lean on that market.
Margins stayed high while sales doubled. Gross margin was 75.0% in the quarter, and operating margin over the past 12 months was 65.21%, which means most of each sales dollar turned into operating profit. If you’re interested in the wider AI trade, our list of 10 Best AI Stocks to Buy in October covers more names.
Who Pays for the Chips Is the Worry
Ferré reported that CoreWeave, a cloud company that rents out AI computing power, plunged in a day after a chart of its bond yields spread online. The drop put its heavy debt in the spotlight and raised doubts about whether it can handle its growing interest costs. Any slowdown in AI spending could hurt chip makers, she noted.
Nvidia is working on the problem directly. Its quarterly release described financing partnerships with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR. They aim to bring more than $500 billion of outside capital into AI infrastructure over time, though the deals still need definitive agreements.
