Why NVIDIA Is More Than Just a Chipmaker Now ?
NVIDIA reported impressive results once again, with quarterly revenue reaching $44.1 billion, a 69% increase from the same period last year. However, this quarter wasn’t just about strong performance geopolitical challenges came into focus. A new U.S. export restriction led to a $4.5 billion inventory write down and reduced the forecast for next quarter by $8 billion.
CEO Jensen Huang highlighted the risks, stating:
“China’s AI moves on with or without US chips”
The company continues to perform well, but the environment is becoming more uncertain.
Q1 FY26 Summary (quarter ending April):
Note: NVIDIA’s fiscal year ends in January.
Revenue
Total revenue rose 12% from the previous quarter to $44.1 billion, beating estimates by $800 million.
Data Center: +10% to $39.1 billion
Gaming: +48% to $3.8 billion
Professional Visualization: Flat at $0.5 billion
Automotive: -1% to $0.6 billion
OEM & Other: -12% to $0.1 billion
Margins & Earnings
Gross margin: 61% (down 13 percentage points)
Operating margin: 49% (down 12 points)
Non GAAP operating margin: 53%
Non GAAP EPS: $0.81 (beat by $0.06)
Cash Flow
Operating cash flow: $27.4 billion (62% of revenue)
Free cash flow: $26.1 billion (59% of revenue)
Balance Sheet
Cash and equivalents: $53.7 billion
Total debt: $8.5 billion
Guidance for Q2 FY26
Expected revenue: $45.0 billion (+2% Q/Q), $700 million below forecasts
Expected gross margin: 72% (up 11 points)
Despite global tension, NVIDIA remains strong. The company outperformed again, but the real story is the growing impact of U.S.-China trade restrictions.
Data Center continues to be the main growth driver
Revenue reached $39.1 billion (up 73% Y/Y and 10% Q/Q), nearly 90% of total revenue.
Cloud providers led the demand as NVIDIA’s new Blackwell chips ramped up.
Compute revenue was $34.2 billion (+5% Q/Q), while networking jumped 64% to $5.0 billion, driven by increased adoption of NVLink and Spectrum-X.
Notable Developments
Blackwell systems are being shipped to major cloud and enterprise customers.
NVIDIA also began testing its new GB300 NVL72 supercomputer.
Networking growth remained strong, underlining the importance of integrated system solutions
Gaming
Gaming revenue reached $3.8 billion, up 48% quarter-over-quarter and 42% year-over-year—an all time high. Growth was driven by the rapid launch of the new Blackwell GPUs, beating analyst forecasts by over 30%.
Professional Visualization
Revenue held steady at $511 million, up 19% from a year ago. Demand continues to grow in design, healthcare, and simulation industries using upgraded workstation platforms.
Automotive
The segment delivered $567 million in revenue, up 72% year-over-year but down 1% from last quarter. Key growth areas remain autonomous driving systems and digital cockpit solutions, supported by new partnerships.
Margins Under Pressure
Margins were temporarily hit by a $4.5 billion inventory write-down tied to U.S. export restrictions. Without that charge, non-GAAP gross margin was 71%. Management expects margins to recover to 72% next quarter and is still targeting mid-70s by year-end.
China’s Growing Impact
NVIDIA missed out on $2.5 billion in Q1 revenue due to the H20 export ban and expects an $8 billion hit in Q2. CEO Jensen Huang was direct:
“The $50 billion China market is effectively closed to US industry.”
“We cannot reduce Hopper chips further to comply with export rules.”
“Restrictions are helping China grow stronger while weakening the U.S. position.”
He warned that the ban is accelerating China’s development and that assumptions about China’s capabilities are no longer accurate. While NVIDIA is still exploring limited workarounds, no solutions are ready.
Global Demand Offsets China Weakness
Even as China access narrows, demand in other regions is growing fast. Huang highlighted rising investment in national infrastructure projects what he called “Sovereign AI” as a key growth area:
“Countries like Japan, Germany, India, and the UK are investing heavily in national AI platforms to boost their economies.”
NVIDIA is working with governments and companies worldwide to build large-scale computing centers and infrastructure.
Data Center Growth
CFO Colette Kress noted that Data Center revenue rose 69% year-over-year to $44 billion. AI infrastructure spending remains strong, with a large share now focused on inference workloads.
Blackwell now makes up almost 70% of compute-related revenue in the Data Center segment.
Cloud providers (Amazon, Microsoft, Google, Oracle) make up nearly half of Data Center revenue, deploying Blackwell at scale. Consumer platforms (Meta, xAI, Google Cloud) are driving demand for advanced networking. Enterprise customers are using NVIDIA for automation across finance, healthcare, and retail sectors.
Blackwell Adoption
Blackwell’s rollout is the fastest in company history, driving the majority of Data Center growth.
Microsoft alone has already deployed tens of thousands of Blackwell GPUs, with OpenAI as a major customer. Major cloud providers are now installing nearly 72,000 GPUs per week.
Sampling for the next-gen GB300 systems has begun, with full shipments expected later this quarter.
China Restrictions
Kress confirmed that the $8 billion impact from China is fully baked into Q2 guidance. Without restrictions, revenue would have been closer to $53 billion. She warned that losing access to China would have lasting effects and give foreign competitors an edge.
Shift to Inference Workloads
Demand is growing for systems that handle reasoning and fast response times. This is boosting GPU use in financial services and high-speed startups, which are seeing higher throughput and lower latency.
Looking Ahead
Capital Allocation Strategy
NVIDIA returned $14 billion to shareholders in Q1 through buybacks—a record. But with rising demand from government partnerships and sovereign infrastructure projects, some investors may question whether capital returns will begin to compete with spending on expansion, acquisitions, or domestic production.
The current trend shows funds are holding steady—neither increasing nor cutting positions significantly. NVIDIA is still one of the most commonly held stocks. However, with NVIDIA now accounting for nearly 7% of the S&P 500, many top fund managers are underweight compared to the index.
NVIDIA is trading at about 32 times forward earnings—similar to Microsoft and well above most other semiconductor companies. But this isn’t speculative hype: last quarter’s $20 billion in net income (up 31% year-over-year), even after a large write-down, shows the profits are solid. Still, with China effectively out of play, expectations are very high.
Key risks remain
Cyclical exposure: NVIDIA’s growth depends on continued demand. If AI infrastructure spending slows, revenue could fall quickly.
Geopolitical pressure: The situation with China is limited, and the long-term effects of U.S. export restrictions are still unfolding.
Customer concentration: Large cloud providers continue to buy from NVIDIA, but many are also developing their own chips.
Global Expansion Continues
Capital spending remains strong across the tech sector. While China is no longer a growth market for NVIDIA, demand is rising elsewhere.
CEO Jensen Huang noted that over 100 AI infrastructure projects powered by NVIDIA are already in progress across countries like Saudi Arabia, Taiwan, and the UAE:
“Every country now sees AI as critical to its future economy.”
NVIDIA’s focus goes beyond selling chips it’s becoming a core supplier for national-level infrastructure. The company is building out global scale through partnerships in both public and private sectors, from data centers to government-backed cloud systems.
Challenges remain, especially on the policy side. But broadly, the market still sees this as the beginning of a longer term growth cycle
NVIDIA reported impressive results once again, with quarterly revenue reaching $44.1 billion, a 69% increase from the same period last year. However, this quarter wasn’t just about strong performance geopolitical challenges came into focus. A new U.S. export restriction led to a $4.5 billion inventory write down and reduced the forecast for next quarter by $8 billion.
CEO Jensen Huang highlighted the risks, stating:
“China’s AI moves on with or without US chips”
The company continues to perform well, but the environment is becoming more uncertain.
Q1 FY26 Summary (quarter ending April):
Note: NVIDIA’s fiscal year ends in January.
Revenue
Total revenue rose 12% from the previous quarter to $44.1 billion, beating estimates by $800 million.
Data Center: +10% to $39.1 billion
Gaming: +48% to $3.8 billion
Professional Visualization: Flat at $0.5 billion
Automotive: -1% to $0.6 billion
OEM & Other: -12% to $0.1 billion
Margins & Earnings
Gross margin: 61% (down 13 percentage points)
Operating margin: 49% (down 12 points)
Non GAAP operating margin: 53%
Non GAAP EPS: $0.81 (beat by $0.06)
Cash Flow
Operating cash flow: $27.4 billion (62% of revenue)
Free cash flow: $26.1 billion (59% of revenue)
Balance Sheet
Cash and equivalents: $53.7 billion
Total debt: $8.5 billion
Guidance for Q2 FY26
Expected revenue: $45.0 billion (+2% Q/Q), $700 million below forecasts
Expected gross margin: 72% (up 11 points)
Despite global tension, NVIDIA remains strong. The company outperformed again, but the real story is the growing impact of U.S.-China trade restrictions.
Data Center continues to be the main growth driver
Revenue reached $39.1 billion (up 73% Y/Y and 10% Q/Q), nearly 90% of total revenue.
Cloud providers led the demand as NVIDIA’s new Blackwell chips ramped up.
Compute revenue was $34.2 billion (+5% Q/Q), while networking jumped 64% to $5.0 billion, driven by increased adoption of NVLink and Spectrum-X.
Notable Developments
Blackwell systems are being shipped to major cloud and enterprise customers.
NVIDIA also began testing its new GB300 NVL72 supercomputer.
Networking growth remained strong, underlining the importance of integrated system solutions
Gaming
Gaming revenue reached $3.8 billion, up 48% quarter-over-quarter and 42% year-over-year—an all time high. Growth was driven by the rapid launch of the new Blackwell GPUs, beating analyst forecasts by over 30%.
Professional Visualization
Revenue held steady at $511 million, up 19% from a year ago. Demand continues to grow in design, healthcare, and simulation industries using upgraded workstation platforms.
Automotive
The segment delivered $567 million in revenue, up 72% year-over-year but down 1% from last quarter. Key growth areas remain autonomous driving systems and digital cockpit solutions, supported by new partnerships.
Margins Under Pressure
Margins were temporarily hit by a $4.5 billion inventory write-down tied to U.S. export restrictions. Without that charge, non-GAAP gross margin was 71%. Management expects margins to recover to 72% next quarter and is still targeting mid-70s by year-end.
China’s Growing Impact
NVIDIA missed out on $2.5 billion in Q1 revenue due to the H20 export ban and expects an $8 billion hit in Q2. CEO Jensen Huang was direct:
“The $50 billion China market is effectively closed to US industry.”
“We cannot reduce Hopper chips further to comply with export rules.”
“Restrictions are helping China grow stronger while weakening the U.S. position.”
He warned that the ban is accelerating China’s development and that assumptions about China’s capabilities are no longer accurate. While NVIDIA is still exploring limited workarounds, no solutions are ready.
Global Demand Offsets China Weakness
Even as China access narrows, demand in other regions is growing fast. Huang highlighted rising investment in national infrastructure projects what he called “Sovereign AI” as a key growth area:
“Countries like Japan, Germany, India, and the UK are investing heavily in national AI platforms to boost their economies.”
NVIDIA is working with governments and companies worldwide to build large-scale computing centers and infrastructure.
Data Center Growth
CFO Colette Kress noted that Data Center revenue rose 69% year-over-year to $44 billion. AI infrastructure spending remains strong, with a large share now focused on inference workloads.
Blackwell now makes up almost 70% of compute-related revenue in the Data Center segment.
Cloud providers (Amazon, Microsoft, Google, Oracle) make up nearly half of Data Center revenue, deploying Blackwell at scale. Consumer platforms (Meta, xAI, Google Cloud) are driving demand for advanced networking. Enterprise customers are using NVIDIA for automation across finance, healthcare, and retail sectors.
Blackwell Adoption
Blackwell’s rollout is the fastest in company history, driving the majority of Data Center growth.
Microsoft alone has already deployed tens of thousands of Blackwell GPUs, with OpenAI as a major customer. Major cloud providers are now installing nearly 72,000 GPUs per week.
Sampling for the next-gen GB300 systems has begun, with full shipments expected later this quarter.
China Restrictions
Kress confirmed that the $8 billion impact from China is fully baked into Q2 guidance. Without restrictions, revenue would have been closer to $53 billion. She warned that losing access to China would have lasting effects and give foreign competitors an edge.
Shift to Inference Workloads
Demand is growing for systems that handle reasoning and fast response times. This is boosting GPU use in financial services and high-speed startups, which are seeing higher throughput and lower latency.
Looking Ahead
Capital Allocation Strategy
NVIDIA returned $14 billion to shareholders in Q1 through buybacks—a record. But with rising demand from government partnerships and sovereign infrastructure projects, some investors may question whether capital returns will begin to compete with spending on expansion, acquisitions, or domestic production.
The current trend shows funds are holding steady—neither increasing nor cutting positions significantly. NVIDIA is still one of the most commonly held stocks. However, with NVIDIA now accounting for nearly 7% of the S&P 500, many top fund managers are underweight compared to the index.
NVIDIA is trading at about 32 times forward earnings—similar to Microsoft and well above most other semiconductor companies. But this isn’t speculative hype: last quarter’s $20 billion in net income (up 31% year-over-year), even after a large write-down, shows the profits are solid. Still, with China effectively out of play, expectations are very high.
Key risks remain
Cyclical exposure: NVIDIA’s growth depends on continued demand. If AI infrastructure spending slows, revenue could fall quickly.
Geopolitical pressure: The situation with China is limited, and the long-term effects of U.S. export restrictions are still unfolding.
Customer concentration: Large cloud providers continue to buy from NVIDIA, but many are also developing their own chips.
Global Expansion Continues
Capital spending remains strong across the tech sector. While China is no longer a growth market for NVIDIA, demand is rising elsewhere.
CEO Jensen Huang noted that over 100 AI infrastructure projects powered by NVIDIA are already in progress across countries like Saudi Arabia, Taiwan, and the UAE:
“Every country now sees AI as critical to its future economy.”
NVIDIA’s focus goes beyond selling chips it’s becoming a core supplier for national-level infrastructure. The company is building out global scale through partnerships in both public and private sectors, from data centers to government-backed cloud systems.
Challenges remain, especially on the policy side. But broadly, the market still sees this as the beginning of a longer term growth cycle
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🟣MasterClass moonypto.com/masterclass
🟢Signal moonypto.com/signal
🔵News t.me/moonypto
⚪ t.me/moonyptofarsi
🟢Signal moonypto.com/signal
🔵News t.me/moonypto
⚪ t.me/moonyptofarsi
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.