Jim Cramer Turns Mega Bullish on Nvidia: “The Era of Humongoud Profits Has Begun”
Jim Cramer spent Tuesday questioning Nvidia's biggest strategic moves, then reversed course Wednesday with one of his most bullish calls in years. Here is what changed his mind.
Two days after NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) reported fiscal Q2 2027 results, Jim Cramer argued that the numbers have refuted the bear case on hyperscaler AI spending. “The era of profitless chip buying is over. The era of humongous profits has begun.“
Just one day earlier, Cramer had questioned whether NVIDIA’s $30 billion OpenAI investment helped to finance OpenAI’s new competing chip. Now, Cramer’s bullish stance is great news for investors.
Customer Diversification Widens
One of the big reasons for Cramer’s change in stance is Nvidia’s new diversification of its customer mix: “Hyperscalers, who want so much of Nvidia’s book of business, are now down to 50% of it. Sovereign buyers, neo cloud infrastructure builders getting the other 50%, far less dependence on a handful of titanic clients,” he said.
Bears read this as customers walking away, but investors like Cramer see this as diversification among key customers. NVIDIA’s ACI&E segment, which houses neoclouds, sovereigns, and enterprises, generated $40 billion in revenue with 138% year-over-year growth, and CFO Colette Kress said non-hyperscaler demand is expected to represent roughly half of NVIDIA’s data center business.
Useful Life Stretches to Seven Years
Cramer directly addressed the obsolescence worry around Nvidia chips. “The chips are lasting far longer than anyone thought, maybe as long as seven years, because software updates keep them refreshed,” he said. If that estimate holds, the payback window on hyperscaler capex would lengthen materially. Profitability for hyperscaler investment could embolden decision makers to continue investing, which benefits Nvidia.
Amazon (NASDAQ:AMZN) disclosed that its servers have useful lives of at least 5-6 years and that server and networking investments break even in a little less than 3 years. Jensen Huang’s parallel claim: “The investment that you make will be preserved and useful and productive for a lot longer time.”
Customer Margins Expanding
The profitability argument directly answers Principal Asset Management’s Seema Shah, who told CNBC on August 24 that investors would no longer accept capex plans without proof of monetization. AWS grew 36.7% year over year to $42.2 billion in Q2 2026, its fastest growth in 18 quarters, at a 39% operating margin.
Nvidia CEO Jensen Huang put it bluntly: “NVIDIA’s compute is so productive, the tokens they’re generating, the GPU hours they’re renting out is insanely profitable, as you know. Their margins are fantastic.“
AWS Commitment and Guidance
Cramer noted that “Amazon Web Services plans to deploy 2 million GPUs, the kind of semis Nvidia specializes in, as well as plenty of Nvidia CPUs.” NVIDIA confirmed deployment starts this quarter and runs through the second quarter of fiscal 29, including Vera CPUs. Andy Jassy framed the choice as complementary, calling it a “deep partnership with NVIDIA” even as Amazon’s Trainium and Graviton chips business runs at over $25 billion annualized.
Management labeled the fiscal 2028 outlook as supply-constrained, with customer forecasts pointing to demand doubling next year. That aligns with BofA’s Vivek Arya, who on August 26 argued the balance sheet and ecosystem funding disclosures were the point, and called shares 30 to 50% cheap relative to earnings growth. NVIDIA’s Q2 FY27 8-K discloses supply commitments of $279 billion, primarily tied to Vera Rubin memory procurement.
AI ROI Debate Continues
Huang wrapped the buildout in national terms: “This is America’s great opportunity. This is an extraordinary opportunity. AI data centers, AI factories are generating so many jobs all across America. Hundreds of thousands of jobs.“
NVIDIA’s quarter strengthened the argument that AI infrastructure is already producing real economic returns. Its customer base is widening, AWS plans to deploy 2 million GPUs, and demand could double again next year despite the company’s enormous scale. Concerns about funding and long-term returns have not disappeared, but Cramer now believes NVIDIA’s numbers have moved the burden of proof firmly onto the bears.
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Thomas Richmond is a financial writer and content strategist with 5+ years of experience covering stocks and financial markets. He has published over 250 articles focused on individual stock analysis, helping investors better understand business fundamentals, stock valuations, and long-term opportunities.
Thomas previously served as a Content Lead at TIKR, a stock research platform, where he helped scale the company’s blog to hundreds of articles per month and contributed to a weekly newsletter reaching more than 100,000 investors.
He specializes in breaking down complex companies into clear, actionable insights for everyday investors, with a focus on fundamentals-driven research.
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