Good morning. Nvidia just handed AI bubble skeptics their toughest rebuttal yet.
Tech giant Nvidia
reported its fiscal second quarter earnings on Wednesday, with revenue of $96.2 billion, up 106% year over year and above analyst estimates. Non-GAAP EPS came in at $2.22, while Data Center revenue reached $89.0 billion, up 117% year over year.
The company also issued Q3 guidance of $105.8–$110.1 billion and forecast fiscal 2028 annual sales to increase 70% from the prior year.
“Demand is accelerating,” Jensen Huang, founder and CEO of Nvidia, said in a statement.
The results reignited debate over whether AI spending is sustainable and gave both bulls and Nvidia itself new evidence for continued growth.
“This was a masterpiece quarter with stunning guidance that speaks to the massive demand Nvidia is seeing in the AI Revolution,” Dan Ives, partner and senior managing director at Yorkville Ives, told me. “The guidance for next quarter was well ahead of whisper numbers, and this will be a spark that is a boost for tech stocks and the broader sector.”
During the earnings call, CFO Colette Kress offered a data-driven rebuttal to the AI-bubble narrative. Rather than simply asserting that demand is durable, Kress argued that Nvidia’s growth is increasingly diversified beyond
hyperscalers such as Microsoft, Google, Amazon and Meta.
“Hyperscalers will remain a major growth driver, but non-hyperscaler growth, our AICE segment, spanning sovereign, regional NeoClouds, enterprise edge and air-gap data centers, will represent roughly half of our data center business,” Kress said.
That $89 billion in Data Center revenue splits into $49 billion from hyperscalers, up 13% sequentially, and what Nvidia calls ACI&E — enterprise, industrial and NeoCloud customers, which Kress’s quote groups under “AICE.”
This means Nvidia’s fortunes aren’t solely tied to four or five Big Tech capex budgets. They’re increasingly spread across sovereign AI programs, regional cloud providers, corporate deployments, and air-gapped or edge systems.
“Our AI-native start-up ecosystem developed and running primarily on the Nvidia compute platform is scaling at a rapid pace,” Kress said. The wave of companies built on Nvidia’s platform is now a meaningful demand source in its own right.
She backed that up with hard numbers: “Global VC funding in AI, roughly 70% of which is spent on compute, exceeded $400 billion in the first half of 2026, surpassing the $265 billion raised in all of 2025.” Kress’s point is that much of those venture dollars ultimately flow back to GPU purchases or cloud rental, benefiting Nvidia.
Another proof point was naming actual Nvidia clients. “Nearly 20 companies, including Cursor, owned by SpaceX, Figma and Together AI, now exceed $1 billion in annualized run-rate revenue, up from 13 companies in Q4 of last year, with vertical enterprise software logging the fastest growth,” she said.
The fact that vertical enterprise software is the fastest-growing category signals that AI adoption is moving from experimentation into embedded, revenue-generating business software.
“Jensen and Nvidia help put to rest some concerns about financing and balance sheet issues that have been an overhang on the tech sector and capex cycle buildout for the hyperscalers,” Ives said. He added that the demand and metrics “were off the charts” and speak to an acceleration in AI spending. “The yields/debt issue is not going away, but this shows monetization is happening quicker than expected,” he noted.
Sheryl EstradaSheryl.Estrada@fortune.com
