Nvidia's Booming Data Center Revenue Faces Unforeseen Obstacle
Nvidia's data center revenue skyrocketed in fiscal years 2025 and 2026, reaching $115.2 billion and $193.7 billion respectively, totaling about $309 billion across those two years alone.
The company can't build AI hardware fast enough for its customers, but the chips it has already delivered aren't going anywhere. Microsoft, Alphabet, and Meta Platforms depreciate their servers over five to six years, while Amazon initially raised its server estimate from five to six years in 2024 before reversing it, citing the rapid pace of AI development.
Not much of this hardware is due to come out of service in 2028. A machine bought in 2024 on a five-year clock retires in 2029 at the earliest, and on a six-year clock, 2030. The demand Nvidia is counting on that year is almost entirely new capacity, not replacement.
Nvidia's CFO Colette Kress said the company expects revenue to grow about 70% in fiscal 2028, which runs through late January 2028. However, this growth may be hindered by the fact that nearly all of the hardware from the 2024 and 2025 spending waves should still be working in 2028.