Nvidia (NASDAQ: NVDA) expects third-quarter fiscal 2027 revenue of $108 billion, plus or minus 2%. Hence, the company is guiding for third-quarter revenue in the range of $105.8 billion to $110.2 billion.
However, I think Nvidia could report third-quarter revenue of around $113 billion to $114 billion. Here's why this seems like a plausible revenue target for the third quarter.
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Nvidia has exceeded the high end of its revenue guidance in each of the past 12 quarters. Over the past four quarters, actual revenue has averaged 3.1% above the high end of guidance. If that trend continues in the third quarter, revenue could reach roughly $113.6 billion, compared with the current high end of about $110.2 billion.
Historical outperformance alone cannot help predict future revenue. But Nvidia's operating numbers also support similar revenue numbers. In the second quarter of its fiscal 2027 (ended July 26, 2026), Nvidia's hyperscaler revenue increased 13% sequentially to nearly $49 billion. AI Clouds, Industrial, and Enterprise (ACIE) revenue jumped 25% sequentially to $40 billion, while Edge Computing rose 13% sequentially to $7.2 billion.
If the three businesses simply repeat those sequential growth rates in the third quarter, total revenue can reach approximately $113.6 billion. Hence, Nvidia doesn't need growth to accelerate for its guidance to look conservative. The company needs the growth rates it just delivered to roughly continue for another quarter.
ACIE already accounts for about 45% of Nvidia's Data Center revenue. Management expects ACIE to drive most of the sequential revenue growth for Data Center in the third quarter, while hyperscaler demand could pick up more strongly in the fourth quarter and in fiscal 2028. Hence, Nvidia can rely on another large near-term growth driver beyond hyperscalers.
The ongoing ramp of Nvidia's next-generation computing system, Vera Rubin, is also expected to support revenue growth. Production shipments started in August 2026. Vera Rubin systems are expected to contribute about one-fifth of Nvidia's Data Center revenue in the third quarter. Nvidia estimates that its revenue opportunity per gigawatt of AI infrastructure will increase from about $25 billion with Blackwell systems to $40 billion with Vera Rubin systems, partly because the newer platform includes more CPUs, networking products, and other system components.
However, Vera Rubin is already included in Nvidia's third-quarter revenue guidance. Hence, a larger revenue beat will depend mainly on whether the company can ship more systems than expected.
However, certain risks cannot be ignored. Management expects supply to remain constrained through fiscal 2028, while higher memory prices are also adding pressure. Additionally, since hyperscaler revenue is expected to reaccelerate in the fourth quarter, it may provide less upside to third-quarter revenue results than ACIE or other growth drivers.
Nvidia is also preparing for higher demand. Inventory increased from about $21.4 billion in January 2026 to around $31.6 billion in July 2026. Supply and capacity commitments have also jumped from $119 billion in the previous quarter to $279 billion at the end of the second quarter. Nvidia's third-quarter revenue guidance also assumes no Data Center compute revenue from China.
Hence, I think there is a high probability that Nvidia will reach $113 billion to $114 billion in revenue in the third quarter.
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Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Prediction: Nvidia's $108 Billion Q3 Guide Will Look Conservative by December was originally published by The Motley Fool