Nvidia's data center networking business generated $14.8 billion in revenue last quarter, up 199% year over year, as AI clusters demand faster ways to connect thousands of chips together. If Nvidia meets earnings expectations and keeps trading near its current multiple, its market capitalization could approach $7.5 trillion, up from roughly $5.3 trillion today.
Nvidia's data center networking segment generated a record $14.8 billion in revenue in its fiscal 2027 first quarter, which ended April 26, up 199% from a year earlier. The chipmaker remains the dominant force in the AI boom through its graphics processing units, but networking is turning into a second growth engine alongside them.
Networking revenue has multiplied in three years
Nvidia's networking business has scaled quickly. It rose from $8.6 billion in fiscal 2024 to $13 billion in fiscal 2025, then to $31.4 billion in fiscal 2026. Training and running large AI models requires moving enormous amounts of data among thousands of accelerators, and a network that cannot keep pace becomes a bottleneck that reduces GPU utilization.
Nvidia's NVLink technology connects GPUs inside AI rack systems, while its Spectrum-X Ethernet links servers and racks across larger data centers. According to research firm IDC, Nvidia captured 21.5% of data center Ethernet switching revenue in the first quarter of 2026, making it the market leader. Arista Networks trails closely, with an estimated 20.7% share of the same market.
Custom chips push Nvidia deeper into infrastructure
Custom AI chips are a growing competitive threat to Nvidia's GPUs, but its NVLink Fusion rack-scale platform could soften that risk by letting some custom processors work alongside Nvidia's own networking and infrastructure gear. That gives the company a way to profit from rising AI infrastructure spending even when it isn't supplying the accelerator itself.
Nvidia has expanded its partnership with custom chip designer Marvell Technology, under which Marvell will provide custom accelerators and the networking hardware to connect them at high speed, while Nvidia supplies NVLink interconnects, Spectrum-X switches, ConnectX network adapters, and BlueField data processing units. Still, customers can choose competing networking technology, and networking gains may not fully offset any lost GPU sales to rival chipmakers.
A path toward a $7.5 trillion valuation
Nvidia trades at about 24.1 times Wall Street's fiscal 2027 earnings estimate of roughly $9 per share as of Aug. 12. Analysts currently expect earnings to climb to about $12.90 per share in fiscal 2028.
If Nvidia hits that estimate and keeps trading near the same forward multiple, its market capitalization could then approach $7.5 trillion, up from roughly $5.3 trillion today. Valuation compression would still limit the upside even if earnings rise as expected.
Source: The Motley Fool
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