Mirror Review
May 29th, 2025
Summary:
- NVIDIA (NVDA) announced strong financial results for its first quarter of fiscal 2026, surpassing analyst expectations for revenue and earnings.
- The NVIDIA Q1 2026 Earnings Report highlighted a massive 69% year-over-year revenue jump, driven primarily by its booming Data Center business.
- However, the celebration was tempered by significant impacts from new U.S. export restrictions on sales to China.
- Despite these challenges, the company’s stock saw a positive reaction in after-hours trading.
NVIDIA Q1 Fiscal 2026: The Key Numbers
NVIDIA reported impressive figures for its first quarter ended April 27, 2025:
- Revenue: $44.1 billion, a 12% increase from the previous quarter and a 69% increase from the same period last year. This beat analyst expectations of $43.31 billion.
- Data Center Revenue: Reached $39.1 billion, up 10% sequentially and 73% year-over-year. This segment now accounts for 88% of total revenue.
- Gaming Revenue: Hit a record $3.8 billion, marking a 48% increase from Q4 and a 42% rise from a year ago.
- Earnings Per Share (EPS): Adjusted EPS stood at $0.96 (excluding a charge related to China inventory), beating the expected $0.93. GAAP EPS was $0.76.
- Net Income: Increased 26% to $18.8 billion.
- Gross Margin: GAAP and non-GAAP gross margins were 60.5% and 61.0%, respectively.
The China Challenge: H20 Exports Restrained
The main challenge during the quarter was the U.S. government’s decision, communicated on April 9, 2025, to require licenses for exporting NVIDIA’s H20 products to China.
This H20 chip was specifically designed to comply with previous U.S. export controls.
This new rule led to:
- A $4.5 billion charge in Q1 due to excess H20 inventory and purchase obligations as demand dropped. This was lower than the initially anticipated $5.5 billion because some materials could be repurposed.
- $2.5 billion in lost H20 revenue that couldn’t be shipped in Q1.
- A projected $8 billion hit to H20 revenue in the second quarter due to these limitations.
CEO Jensen Huang described the situation, stating, “The H20 export ban ended our Hopper data center business in China,” and that the $50 billion China market is now “effectively closed to U.S. industry”.
Furthermore, Huang warned that these restrictions could push China to develop its own AI ecosystem, therefore weakening America’s tech leadership.
Key Insights from the NVIDIA Earnings Report Q1 2026
Despite the China headwinds, NVIDIA’s overall performance and outlook underscore its central role in the AI revolution.
- Unrelenting AI Demand:
“Global demand for NVIDIA’s AI infrastructure is incredibly strong,” said Jensen Huang.
He noted that AI inference token generation has surged tenfold in a year, and demand will likely accelerate as AI agents become more common.
Large cloud providers remain key customers, accounting for nearly half of the Data Center revenue.
- Blackwell is Ramping Up:
The “breakthrough Blackwell NVL72 AI supercomputer” is now in full-scale production.
These powerful chips are available through major cloud providers like AWS, Google Cloud, Microsoft Azure, and Oracle Cloud Infrastructure.
Moreover, Microsoft alone has deployed “tens of thousands” and is expected to ramp up significantly.
- Expanding AI Ecosystem:
NVIDIA is actively building “AI factories” globally, with projects in the U.S., Saudi Arabia (with HUMAIN), the UAE (Stargate UAE with partners like G42 and OpenAI), and Taiwan (with Foxconn).
They’ve also launched new networking switches and platforms to scale these factories.
- Gaming and Beyond:
The gaming division continues to thrive, boosted by new GeForce RTX 50-series GPUs and the processor powering the new Nintendo Switch 2. Automotive revenue also saw a significant 72% annual jump.
- Future Outlook:
NVIDIA expects Q2 revenue to be around $45.0 billion, despite the $8 billion China impact. Non-GAAP gross margins are expected to rebound to around 72.0% in Q2, with a goal of reaching the mid-70% range later in the year.
Looking Ahead
NVIDIA’s Q1 fiscal 2026 results show just how strong the global appetite for AI computing is. From record-breaking Data Center revenue to rapid adoption of the Blackwell AI supercomputers, the company is clearly at the heart of the AI wave.
Indeed, the U.S. export controls on China present a “challenging operating environment”. But Jensen Huang isn’t slowing down—he’s pushing ahead with new products, global AI partnerships, and continued innovation.
The NVIDIA Q1 2026 Earnings Report is a clear signal of both the big opportunities in AI—and the global tensions that now shape its path forward.
