The short version is that Nvidia's revenue growth is speeding up, not slowing down, even though the company is currently locked out of China. In plain terms, revenue growth is the rate at which a company's total sales increase over a specific period. This acceleration stands out because the stock has underperformed some smaller rivals this year, despite Nvidia remaining the most valuable publicly traded company with a market cap north of $5 trillion.
Growth outpaces market expectations
Investors often assume that when a major stock lags its sector, the company's fundamentals are weakening. That is not the case here. Nvidia's year-over-year revenue growth has climbed steadily through recent quarters. The company reported 56% growth in the second quarter of fiscal 2026, followed by 63% in the third quarter, 73% in the fourth quarter, and 85% in the first quarter of fiscal 2027. The second quarter of fiscal 2027 saw growth hit 106%.
Nvidia has guided for $108 billion in revenue for the current quarter, which it will report in mid-November. This figure represents an 89% year-over-year increase. While this is lower than the previous quarter's 106% jump, it still signals strong momentum. The company's guidance does not include any data center compute revenue from China, meaning the current growth figures are achieved without sales to the world's second-largest economy.
Valuation and China prospects
Wall Street analysts have significantly raised their earnings estimates for Nvidia. At the start of the calendar year, projections were for about $6.50 per share in the current fiscal year and $8.50 per share in the following year. Those numbers have since been bumped to $9.31 and $15.68, respectively. This represents a 43% increase for the current fiscal year and an 85% boost for next year.
Despite these higher earnings projections, the stock trades at 14 times next year's projected earnings. This multiple is relatively low given the pace of fundamental improvement. CEO Jensen Huang is expected to attend a state dinner at the White House this week with President Trump and Chinese President Xi Jinping. A similar dinner in Beijing four months ago did not lead to eased trade restrictions. If China opens up to Nvidia data center chip shipments, it would add incremental revenue to a company already growing at a healthy pace. Risks remain, including local backlash against data center build-outs and questions about the sustainability of Nvidia's 75% gross margins. However, the combination of low valuation and potential China access offers a distinct setup for investors watching the fall season.