Jordan
Long-Term Stock Investor, Compounding & Portfolio Construction
Nvidia's Q2 shows AI infrastructure demand still accelerating, making it a company you simply have to own if the AI revolution is as big as believed. Revenue reached $96.2B, up 106% y/y and 18% q/q, with data center revenue at $89.0B, up 117%, and gross margin steady at 75%. Q3 guidance of $108B assumes zero China data-center compute revenue, which may change. Vera Rubin is in full production. The after-hours dip is irrelevant next to these figures. x.com x.comÂ
Nvidia can look expensive but is an opportunity once growth is priced in through forward P/E and PEG. Annual revenue more than tripled in two years, from $60.9B in FY2024 to $215.9B in FY2026, as cloud providers raced to build AI data centers on its GPUs. Q1 FY2027 revenue rose 85% to $81.6B, with data center up 92%, non-GAAP EPS up 140%, gross margin at 74.9% and operating cash flow of $50.3B. x.comÂ
Anthropic's customer spending and compute buildout show AI monetizing at scale, a bullish read-through for Nvidia, Broadcom, Alphabet, Amazon, Microsoft, Nebius, CoreWeave and Hut 8. Its IPO filing reports H1 revenue up 14-fold to $16.3B, 11,900+ customers spending $100K+ annually and 1,900+ spending $1M+, alongside $9B in H1 infrastructure spending and about $430B in future compute commitments. x.comÂ
Nvidia's monster quarter shows the AI boom continuing, with revenue growth accelerating to over 100%. Per the reported results, Q2 revenue was $96.2B, up 106%, data center revenue $89.0B, up 117%, and Q3 guidance $108B. x.comÂ
Nvidia's AI profits are real, but its compute demand depends heavily on fragile venture funding. Per Chamath, 1% of firms account for 90% of AI spending, and 72 cents of each dollar comes from unprofitable VC-backed firms. Venture money passes through startups to Nvidia and cloud suppliers; if the next raises fail, concentrated orders could contract together. x.com x.com x.comÂ
Enterprise and neocloud demand is creating a second wave of AI infrastructure spending, with tailwinds for Nvidia and Super Micro. Dell forecasts 200 GW of AI data center growth through 2030, half driven by these customers, and estimates a $1 trillion AI infrastructure opportunity over the next four years. AI servers could enter a new growth phase in 2027, with higher shipment volumes and more revenue per deployment. x.comÂ
Nvidia's rising revenue alongside a much lower P/E is getting hard to ignore. Its chart shows quarterly revenue above $80 billion in Q2 2026 while the P/E is around 30x, down from much higher multiples in prior years. x.comÂ
Nvidia's ballooning future commitments relative to its revenue evoke Enron. Per Gary Marcus, citing Fortune and Nvidia's 10-Q, second-quarter revenue was $96 billion while future commitments total $366 billion, led by $279 billion of supply and capacity commitments, up from $119 billion a quarter earlier, plus cloud service agreements, data-center leases, equity investments and capex commitments. x.comÂ
Nvidia's numbers are still underappreciated, giving a really good risk/reward at 18-19x forward earnings. Revenue rose 106% to $96.2B, data center 117% to $89B, with 75% gross margin and $108B next-quarter guidance excluding China. Nvidia now sells the whole AI factory, GPUs, CPUs, networking, systems and software, capturing more of the stack each generation. The valuation already prices a spending slowdown, the familiar bear case alongside hyperscaler in-house chips. x.com x.comÂ
Nvidia's capacity commitments argue against AI orders drying up soon. Its filings show mostly memory and manufacturing commitments rising from $119 billion to $279 billion in one quarter, with about $175 billion covering 2027-28. Fewer new data-center projects could reflect power, land and building bottlenecks rather than weaker demand; a mid-teens multiple still reflects a fair worry that profits may not last. x.comÂ
Nvidia's margins are effectively fake because it round-trips its revenue, and its reported $250B financing guarantee for OpenAI's Ohio data center looks one-sided and independent of chip sales. That $250B exceeds all of Nvidia's lifetime AI profits, as Dr_Gingerballs pointed out, and its downstream entanglements mean its true margins are lower. x.comÂ
Anthropic's customer growth gives AI compute suppliers firmer demand evidence than capacity plans. Its S-1 reports $16.3B in H1 2026 revenue and about 900% net retention as of September 30, the strongest evidence yet of adoption. Over $500B in commitments include a roughly $125B five-year Broadcom equipment lease plus Amazon, Google and Microsoft arrangements; Nvidia GPUs are in its mix. Long-term obligations could outlast usage revenue. x.comÂ
