I’ve covered semiconductor stocks for five years, and heading into 2027, Nvidia (NASDAQ: NVDA) would be my top pick if I could buy just one.
Nvidia continues to hold a dominant position in the artificial intelligence (AI) accelerator market. The company’s revenue soared 106% year over year to $96.2 billion in the second quarter of fiscal 2027 (ending July 26). Management now expects revenue to grow by around 70% year over year in fiscal 2028.
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But Nvidia’s biggest advantage heading into calendar year 2027 may be that it is finding more ways to make money from every AI data center.
Nvidia has expanded beyond GPUs
Management estimates that Nvidia’s revenue opportunity for every gigawatt of AI infrastructure has increased from around $18 billion with Hopper GPUs to $25 billion with Blackwell systems and $40 billion with Vera Rubin systems. This increase partly reflects Nvidia’s expanding presence in CPUs, networking, and other hardware needed to build complete AI data centers.
Nvidia is rapidly gaining ground in these newer businesses. According to IDC, Nvidia’s data center Ethernet switching revenue grew 192.7% year over year to $2.1 billion in the first quarter of calendar year 2026. Nvidia accounted for 21.5% share of the data center Ethernet switch market. The company’s networking revenue also rose 18% sequentially, with Spectrum-X Ethernet revenue increasing 2.6 times year over year in the second quarter.
Nvidia’s server CPU business is also gaining momentum. The company’s Grace CPU revenue exceeded $5 billion on a trailing-12-month basis, while the next-generation Vera CPU was already in full production at the end of the second quarter. Management continues to see around $20 billion in total server CPU demand and preliminarily expects CPU revenue to more than double in fiscal 2028.
Advanced Micro Devices and major cloud providers are developing competing AI accelerators, so Nvidia may not retain its current share of the accelerator market. But that does not necessarily mean its AI revenue opportunity will shrink. Hence, I think investors should focus less on Nvidia’s GPU market share alone and more on how much of each AI data center the company can monetize.
