On August 26, NVIDIA reported an "earnings surprise" that exceeded market expectations and projected continued rapid growth, driving its stock up over 4% in U.S. after-hours trading. Boosted by NVIDIA’s performance, AI semiconductor-related stocks such as SanDisk, Micron, and Marvell Technology also rose in after-hours trading, while AI data center firms Nebius and CoreWeave surged around 6%. Octa, an AI security company, and Salesforce, an enterprise software provider, both of which released earnings the same day, jumped over 19% and 12%, respectively. On August 27, SK Hynix rose 5.45% and Samsung Electronics gained 3.06% on South Korea’s KOSPI.
NVIDIA’s earnings report is not just a concern for its shareholders. Since its chips are used in most global data centers and advanced AI models, the company’s performance is seen as a "barometer" for the entire AI industry. Amid growing concerns about a bubble in AI investments, NVIDIA’s results were viewed as a test of whether big tech’s astronomical spending on AI infrastructure remains sustained.
According to Reuters, big tech firms including Microsoft and Meta—key NVIDIA customers—are projected to spend over 730 billion dollars on AI infrastructure this year, an increase of over 80% from approximately 400 billion dollars last year. Whether this investment momentum continues will determine the performance of not only NVIDIA but also the entire AI ecosystem, including memory, networking, and data centers.
NVIDIA’s latest results surpassed high market expectations. The company’s revenue for the second quarter of fiscal 2027 reached 96.22 billion dollars, up 18% quarter-on-quarter and 106% year-on-year, setting a new record just one quarter after its previous high. Data center revenue, a core segment, hit 89 billion dollars, a 117% surge from a year ago. NVIDIA forecasted around 108 billion dollars in revenue for the next quarter.
However, NVIDIA’s stock initially fell in after-hours trading immediately after the earnings announcement, showing no clear upward trend for about 40 minutes. This was attributed to investors’ heightened expectations, as the stock had surged over 1,700% in the past four years and beaten market estimates for eight consecutive quarters. Seth Hickman, Chief Investment Officer at Mindset Wealth Management, said, “NVIDIA’s challenge now is not just delivering good numbers but exceeding the already high expectations,” adding, “Beating Wall Street estimates has become the ‘price of admission.’”
The stock’s direction shifted due to future growth prospects rather than current performance. During the post-earnings conference call, NVIDIA CEO Jensen Huang emphasized that AI has reached an "inflection point" for significant growth. Colette Kress, Chief Financial Officer, projected around 70% revenue growth for fiscal 2028. Following these remarks, NVIDIA’s stock reversed its decline and rose 4.2% in after-hours trading, with trading volume exceeding 50 million shares.
NVIDIA’s optimistic outlook spread to the broader AI sector. According to CNBC, SanDisk rose nearly 4%, Micron Technology gained over 3%, Marvell Technology climbed nearly 3%, and Intel advanced over 1%. Broadcom and AMD also rose. Nebius and CoreWeave, providers of AI data centers, surged around 6% each. NVIDIA’s results were interpreted as a signal that investments in AI infrastructure—spanning servers, memory, networking, and data centers—will continue.
The AI investment frenzy is also reflected in security and software sectors. Octa, a U.S. enterprise identity management security firm, reported 805 million dollars in revenue for the second quarter of fiscal 2027, an 11% increase year-on-year. The growth is driven by demand for securing AI agents that operate without human intervention. Octa’s stock jumped 19.4% in after-hours trading following strong results and an upgraded annual forecast.
Salesforce, the global leader in customer relationship management (CRM), rose 12.7% in after-hours trading the same day. Its second-quarter revenue was 11.35 billion dollars, up 11% year-on-year and slightly exceeding the market estimate of 11.32 billion dollars. Net profit surged 87% to 3.53 billion dollars. Notably, Salesforce recorded a 2.6 billion dollars strategic investment gain from its stakes in AI startups like Anthropic.
However, NVIDIA’s stock itself is no longer dominating as it once did. While NVIDIA’s shares rose over 12% this year, the Philadelphia Semiconductor Index (SOX) surged over 60%. The benefits of AI data center investments are now spreading beyond NVIDIA to memory, networking, and data center sectors, leading to stronger gains for other AI-related companies.
Concerns about AI investments persist. Reuters reported growing worries over "circular financing," where AI companies provide funds to customers or startups, which then use the money to purchase AI chips and infrastructure.
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