Nvidia Just Guided for 70% Revenue Growth in Fiscal Year 2028. Here's What That Means for AI Stocks.

Nvidia (NASDAQ: NVDA) has done it again. The artificial intelligence (AI) computer chip giant just posted another quarter of 100% revenue growth, reaching $96 billion in quarterly sales. By the end of the fiscal year 2027 in January, the company may generate well over $400 billion in revenue. But that is not the end of the story. On the conference call, Nvidia executives projected that revenue would grow by 70% next fiscal year.

This insatiable growth is hard to fathom at this scale. Here's what it means for Nvidia and other AI-related stocks if it can put up this 70% revenue growth next fiscal year.

Projected growth through the next fiscal year

Nvidia is currently in its fiscal year 2027, which ends in January of next year, but is mainly in calendar year 2026. Fiscal year 2028 will end in January 2028, but is mainly in the calendar year of 2027.

Last quarter, Nvidia's revenue grew 106% year over year to $96 billion, driven by rising demand for data center chips for AI. In Q3, it expects to generate $108 billion in sales, putting it on track to exceed $400 billion in total revenue in fiscal year 2027, provided Q4 shows further phenomenal growth.

That is impressive, but perhaps even more impressive is what Chief Financial Officer Colette Kress said on the earnings call. She said the company is expecting revenue to grow by 70% in fiscal year 2028. If Nvidia reaches $425 billion in revenue this year, that would mean over $700 billion in revenue next fiscal year and knocking on the door of $1 trillion a few years from now.

Clearly, the AI boom is showing no signs of slowing down.

Image source: Nvidia.

Other AI stocks that benefit

Amid the AI spending boom, Nvidia is at the center of the supply chain. As it grows, so too will the rest of the market.

A few stocks that could benefit from rising demand for Nvidia products over the next few years are those that supply Nvidia. These include its manufacturing partner, Taiwan Semiconductor, memory chipmakers like Micron Technologies, or semiconductor equipment specialists like ASML. If Nvidia increases its volume, that will mean more demand for these players.

On the other hand, Nvidia's customers may face pricing pressure as supply still does not meet demand in the AI data center build-out. Nvidia recently raised its prices by 15% for chips shipping next year, due to rising memory chip costs, which are an input to its systems. Infrastructure players like Amazon, Microsoft, or SpaceX that buy a lot of Nvidia chips may face margin pressure starting next year if they cannot pass these price increases on to consumers.

However, overall, the entire AI complex should benefit if Nvidia projects revenue to continue scaling at this rapid rate.

Should you buy Nvidia stock?

Another impressive part of Nvidia's stock run is its profit margins. Operating margin was 64% over the last 12 months, which is incredible efficiency given its 75% gross margin. Assuming Nvidia can reach $700 billion in revenue in fiscal year 2028, a 64% operating margin would equate to $448 billion in operating earnings, making Nvidia by far the most profitable business in the world.

Today, the stock has a market cap of $5 trillion and may head higher on bullish revenue growth guidance. That is still just a multiple of 11x these 2028 earnings projections, which looks cheap.

The big question is how sustainable these earnings would be over the next decade. If you believe AI infrastructure demand is here to stay or will grow, then Nvidia stock should be worth much more five years from now, making it a buy at today's prices.

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends ASML, Amazon, Micron Technology, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.