- Nvidia's Q2 revenue rose 18% QoQ to $89 billion, led by data center growth
- Neoclouds, including in India, drive ACIE growth via partnerships with local firms
- Hyperscaler growth to resume in Q4, with Vera Rubin chip supply increasing
Nvidia Corp.'s 16th straight revenue beat in the second quarter is proof the AI race is far from over, but it also shows momentum shifting towards smaller, regional players for the next leg of growth. India is already part of that shift.
The chipmaker may be riding the AI infrastructure boom this quarter, but the sharper gains are coming from its Advanced Cloud and Infrastructure Enterprise (ACIE) segment, driven by neocloud capacity additions.
"Q2 data center revenue increased 18% quarter-over-quarter to $89 billion, with strong contributions from both sub-segments, Hyperscale and ACIE, which includes our Neocloud, Industrial and Enterprise customers," Chief Financial Officer Colette Kress said.
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ACIE revenue itself rose 25% sequentially and 138% year-on-year to $40 billion in the quarter, with neocloud capacity addition driving the surge.
Neoclouds are emerging everywhere, Kress said, including in India. Nvidia has partnered with Indian firms Yotta Data Services and Netweb Services to build local AI factories, sovereign cloud platforms, and large-scale GPU superclusters.
The third-quarter outlook extends that edge to neoclouds and the broader ACIE segment over hyperscalers. "Total revenue is expected to be $108 billion, plus or minus 2%. We expect sequential growth to be driven primarily by ACIE within data center," Kress projected, adding that neoclouds are seeing strong demand pipelines across diverse offtakers.
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Hyperscaler growth, meanwhile, is expected to re-accelerate in the fourth quarter and into fiscal 2028 as supply of Nvidia's Vera Rubin chips increases.
Chief Executive Officer Jensen Huang said the company is focused on securing infrastructure now, noting that hyperscalers such as Amazon Web Services, Microsoft Azure, Google Cloud Platform and Meta Platforms make up only half the picture.
"Most people see just hyperscalers, and that's half of the picture. The other half is what we call AC (Accelerated Computing and Infrastructure Enterprise) — that's all the enterprise, the neoclouds, the sovereign AIs. That part of the world is invisible to everybody," Huang said.
The non-hyperscaler portion of Nvidia's business is roughly doubling year-on-year and is expected to command a larger share of global computing than it does today.
Huang added that AI services will eventually expand across regions worldwide, and that the data centres powering them will not necessarily be built by the hyperscalers themselves.
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