This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Key Points
- Nvidia disclosed visibility into $500 billion of cumulative revenue for Blackwell and Rubin products through 2026, prompting analysts to raise price targets.
- Q2 revenue hit $46.7 billion, but China restrictions are creating uncertainty around $30 billion in potential sales.
- Customer concentration poses risks, while questions persist about whether enterprises can monetize AI spending.
Nvidia (NASDAQ: NVDA) revealed at its GTC conference last week that it has visibility into $500 billion of cumulative revenue through 2026 -- a disclosure that surprised Wall Street and prompted analysts to raise price targets. So is the stock a buy?
On the surface, the numbers leave little doubt. Q2 fiscal 2026 revenue jumped to $46.7 billion, with data center sales at $41.1 billion and gross margins topping 72%. The company returned $24.3 billion to shareholders through dividends and buybacks in the first half of fiscal 2026, with another $60 billion buyback authorized.
But warning signs are flashing. Restrictions on doing business in China threaten $30 billion in annual sales, customer concentration creates vulnerability (two customers represented 39% of Q2 revenue), and businesses continue questioning artificial intelligence's return on investment. Nvidia remains the backbone of AI infrastructure, but the easy money may already be priced in.
So, is there still upside, or has the market already priced in perfection? Let's break down the tech giant's outlook to find out.
The planned revenue changes everything
Nvidia's GTC disclosure caught analysts off guard. The company revealed it has a backlog -- meaning firm orders awaiting fulfillment -- with visibility into $500 billion of cumulative revenue for Blackwell and Rubin products in calendar 2025 and 2026.
Some on Wall Street called the disclosure "surprising," given its scale substantially above prior expectations. The disclosure suggests the AI supply chain is expanding even faster than anticipated.
China and competition create headwinds
Nvidia faces a new financial hurdle under an August 2025 export-license arrangement that requires the company to remit directly to the U.S. government 15% of the revenue from eligible AI chip sales to China.
U.S. officials confirmed the broad framework of the arrangement. It applies to chips like Nvidia's H20 in exchange for export licenses. The 15% payment cut reduces Nvidia's margins and lowers net income compared to a scenario without the levy, even if China sales resume at a tens-of-billions-of-dollars pace.
The greater concern centers on setting a policy precedent. Tying export permissions to a revenue-sharing agreement with Washington represents an unusual mechanism. Some analysts call it a de facto export tax that could tighten or broaden in future rule changes.
Furthermore, competition looms larger than investors acknowledge. Advanced Micro Devices is gaining ground with its MI300 chips. Broadcom dominates custom silicon for hyperscalers. Amazon, Alphabet, and Meta Platforms are accelerating in-house chip development right now.
Nvidia's moat remains formidable. But a 90% market share only moves in one direction: down.
Beyond the data center hype
The bear case often stops at today's AI boom, but that misses Nvidia's bigger play. Quantum research labs lean on Nvidia's CUDA platform. Robotics and autonomous vehicles depend on Nvidia's edge computing.
Industrial automation workloads demand accelerated computing that only Nvidia can deliver at scale. When AI training demand eventually cools, inference workloads, robotics, and scientific computing could add entirely new legs of growth. And then there's the quantum computing race, a potential trillion-dollar market where Nvidia is sure to play a key role over the next decade.
The verdict
Yes, Nvidia stock is a buy for long-term investors willing to stomach volatility. The $500 billion revenue visibility through 2026 provides unprecedented clarity on demand, while 72% gross margins and a dominant market position create a wide moat. Competition from AMD and custom chips will nibble at the edges, but Nvidia's CUDA ecosystem and first-mover advantage in AI infrastructure remain unmatched.
The risks are real -- China restrictions, customer concentration, and questions about AI return on investment could derail the thesis. But Nvidia's exposure extends beyond today's AI boom into quantum computing, robotics, autonomous vehicles, and industrial automation. These markets could add entirely new growth legs as AI training demand matures.
For investors with a three- to five-year horizon, Nvidia remains the definitive way to own the future of accelerated computing. The $500 billion visibility provides unprecedented demand clarity, while the company's CUDA ecosystem creates switching costs competitors can't easily replicate.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
