NVIDIA Corporation's NVDA data center business has become the company's main growth driver, consistently setting new sales records as demand for AI computing surges. In the second quarter of fiscal 2026, the unit reported $41.1 billion in revenues, up 56% from last year, fueled by strong demand from hyperscalers, AI model developers and enterprise customers expanding their AI infrastructure. This performance highlights NVIDIA's dominant role in powering the global AI buildout.
The ongoing ramp-up of the Blackwell architecture is central to NVIDIA's momentum. The GB300 systems, which offer higher performance and improved energy efficiency compared to the previous Hopper generation, are now shipping in large volumes. Customers are using these systems to support complex AI workloads, from large language models to real-time inference. NVIDIA's full-stack approach, which combines GPUs, networking and software, continues to make it the preferred partner for large-scale AI projects.
Management expects data center growth to remain robust, projecting third-quarter total revenues of $54 billion. The Zacks Consensus Estimate for the data center unit is currently pegged at $48.88 billion, indicating a year-over-year increase of approximately 59%. These projections do not factor in potential sales of H20 chips to China, suggesting additional upside as the company has received export approvals for the same.
NVIDIA's technological lead, deep ecosystem and strong customer relationships suggest that its data center business could continue breaking records through 2026 and beyond. The consensus mark for the data center business unit's fiscal 2026 revenues is pegged at $182.12 billion, indicating a year-over-year increase of 58%.
Advanced Micro Devices, Inc. AMD and Intel Corporation INTC are two major companies that are competing closely with NVIDIA in the AI data center space.
Advanced Micro Devices is gaining traction with its MI300 series accelerators, which are designed to handle training and inference for large AI models. AMD's chips have attracted interest from major cloud providers seeking diversification beyond NVIDIA's ecosystem. While Advanced Micro Devices' software stack is still developing, its performance and pricing advantages make it a credible alternative.
Intel is also reasserting its presence with the Gaudi series of AI accelerators. The company is positioning Gaudi 3 as a cost-effective and scalable option for AI data centers, targeting enterprise clients looking for flexibility. Intel's broad reach in CPUs and server infrastructure helps it integrate AI solutions more easily into existing systems.
Shares of NVIDIA have risen around 40.8% year to date compared with the Zacks Computer and Technology sector's gain of 22.8%.
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From a valuation standpoint, NVDA trades at a forward price-to-earnings ratio of 33.46, higher than the sector's average of 29.27.
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The Zacks Consensus Estimate for NVIDIA's fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 48.8% and 39.3%, respectively. Estimates for fiscal 2026 and 2027 earnings have been revised upward in the past 30 days.
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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).