Nvidia's forecast points to accelerating growth, as Vera Rubin starts hitting market

Nvidia has reported an impressive 11th consecutive quarter of revenue growth exceeding 55%, driven by a surge in demand for its AI chips from leading technology companies. As the world's most valuable public company, Nvidia is experiencing a reacceleration in its growth trajectory. In its latest earnings report, the company announced that it anticipates a staggering 77% year-over-year revenue increase this quarter, projecting revenue to reach approximately $78 billion. This growth rate is the highest since January 2025, surpassing the average analyst estimate of $72.6 billion. The fourth quarter also showed remarkable performance, with revenue jumping 73%, exceeding expectations following a 62% growth in the previous period. The data center division, which includes Nvidia's advanced AI graphics processing units, now represents over 91% of total sales. The company is optimistic about its future as it ramps up production of its new rack-scale system, Vera Rubin, which is set to replace the Grace Blackwell system. According to Nvidia, the upcoming Rubin GPUs are designed to deliver ten times more performance per watt compared to their predecessors. CFO Colette Kress mentioned during the earnings call that the first Vera Rubin samples have already been shipped to customers, and she expressed confidence that the system will be widely adopted by model builders and cloud providers alike. She also highlighted expectations for growth this year to surpass previous projections of a $500 billion revenue opportunity from both Blackwell and Rubin, stating, "We believe we have inventory and supply commitments in place to meet future demand, with shipments extending into calendar 2027." Despite a slight dip in shares during extended trading, Nvidia remains a dominant player valued at nearly $5 trillion due to its leadership in AI processors. However, competition is on the horizon, with smaller rival AMD preparing to launch its own AI rack-scale system, Helios, later this year. Additionally, major clients like Amazon and Google are developing their own AI chips, posing a potential threat to Nvidia’s market share. Looking ahead, Nvidia anticipates a slowdown in growth beyond fiscal 2027, projecting declines from 63% this year to 30%, 11.5%, and finally 3% in subsequent years. Yet, current demand is far outpacing that of competitors as tech giants and AI developers strive to expand their infrastructure to meet the explosive need for AI capabilities. CEO Jensen Huang emphasized the critical link between computing power and revenue in the evolving AI landscape, stating, "In this new world of AI, compute equals revenues." He reiterated this sentiment throughout the earnings call, reflecting on the rapid adoption of agentic AI technologies that enable businesses to create and manage applications more efficiently. While Nvidia is not factoring in any potential revenue from data center operations in China due to ongoing uncertainties around export controls, Kress noted that even small amounts of approved H200 products have yet to generate any revenue. The company remains cautious, with no assumptions about data center compute revenue from China included in its outlook.