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August 27, 2026
Nvidia’s AI Boom Is Bigger Than Its Supply Chain Can Handle
Nvidia’s blockbuster quarter and forecast for $108 billion in quarterly revenue underline insatiable AI-chip demand. But strained suppliers, rising memory costs and $108.5 billion in guarantees are sharpening questions about how sustainable the boom is.
Nvidia has turned the AI spending frenzy into a revenue machine on the verge of a $100 billion quarter. Yet the company’s own forecast makes clear that demand is racing ahead of the factories, power and financing needed to satisfy it.
The chipmaker reported $96.2 billion in second-quarter revenue, up 106% from a year earlier, with data-center sales reaching $89 billion. It then forecast $108 billion, plus or minus 2%, for the current quarter—a threshold previously reached by only the largest technology groups.1
On Wednesday’s earnings call, Nvidia also took the unusual step of projecting 70% revenue growth for the next fiscal year, far above the roughly 44% analysts had expected. Jensen Huang cast that outlook as evidence that AI has moved beyond hype: “AI has reached its inflection point. It’s doing useful work.”2 Chief financial officer Colette Kress said customer forecasts point to growth doubling next year, but the company can confidently promise only what it can build.
That is the central constraint. Huang said Nvidia has supply for roughly 70% of demand from existing customers, while demand itself is higher still. “Our entire supply chain is challenged, and it’s everybody; everybody is really running flat out,” he said.3 Memory costs and capacity commitments have risen sharply, while Nvidia expects margins to ease as it navigates pricier components and ramps supply.
The results also revived scrutiny of Nvidia’s role in financing the ecosystem buying its chips. The company disclosed up to $108.5 billion in gross guarantee exposure, largely tied to support for an Ohio campus that would host Nvidia systems leased to OpenAI. Critics call such arrangements circular financing; Kress rejected that framing: “We see it differently.”4
Markets initially hesitated, then pushed the shares higher after the forecast. Outside the earnings call, Elon Musk amplified research arguing that official U.S. GDP data misses much of Nvidia’s contribution, suggesting growth has been understated by about 0.3 percentage points over the past year.
5 The message matches Nvidia’s bullish case—but not the hard reality that demand alone cannot manufacture more compute.