The chipmaker simply answered bears who feared the corporate’s development streak had stalled.
To say that buyers had been on the sting of their seats forward of Nvidia‘s (NVDA -0.27%) extremely anticipated monetary report could be an understatement. Because the poster youngster for the synthetic intelligence (AI) revolution, the corporate has change into the benchmark for the tech trade at massive and the yardstick by which progress in AI is being measured.
Whereas the chipmaker delivered better-than-anticipated outcomes on each the highest and backside strains, there have been a couple of blemishes in what would have been an in any other case spotless report.
Let’s check out what the outcomes reveal, and if they provide us any perception into the way forward for AI.
Nvidia CEO Jensen Huang on stage at GTC 2025. Picture supply: Nvidia.
Paint by numbers
Buyers had excessive hopes forward of Nvidia’s fiscal 2026 first quarter (ended April 27), and the AI chipmaker delivered. The corporate generated document income of $44.1 billion, up 69% 12 months over 12 months and 12% quarter over quarter. This drove adjusted earnings per share (EPS) of $0.81, which climbed 33%.
For context, analysts’ consensus estimates had been calling for income of $43.25 billion and EPS of $0.75, so Nvidia sailed previous expectations with some wiggle room.
Fueling the bullish outcomes was a record-setting efficiency from the information heart phase, which continues to drive development. The phase — which incorporates processors used for information facilities, AI, and cloud computing — generated income that surged 73% 12 months over 12 months to $39.1 billion, pushed by persevering with demand for AI.
One merchandise of observe was the Trump administration’s tightening export restrictions. Nvidia’s H20 processor was initially designed to fulfill the already inflexible necessities for AI chips destined for China. Nevertheless, demand evaporated due to the brand new, extra stringent licensing necessities, inflicting Nvidia to take a $4.5 billion cost in Q1 — although that was decrease than the $5.5 billion estimate the corporate offered final month.
The impression of the transfer trickled its method down the monetary statements. For instance, if not for the write-off, Nvidia’s adjusted EPS would have clocked in at $0.96, leading to successful of about $0.15 per share.
Nevertheless, as income jumped 69%, working bills climbed simply 44%, sending extra to the underside line and serving to blunt the impression of the misplaced gross sales to China. Nvidia’s money stockpile has grown over the previous 12 months, with money and marketable securities of $53.7 billion, a rise of 71%. Free money stream of $26.1 billion soared 75%.
CEO Jensen Huang offered commentary about the way forward for the AI revolution, and the rock star chief govt did not mince phrases:
World demand for Nvidia’s AI infrastructure is extremely robust. AI inference token era has surged tenfold in only one 12 months, and as AI brokers change into mainstream, the demand for AI computing will speed up. International locations all over the world are recognizing AI as important infrastructure — similar to electrical energy and the web — and Nvidia stands on the heart of this profound transformation.
This pronouncement, mixed with the corporate’s sturdy enterprise efficiency, helped drive Nvidia inventory larger in after-hours buying and selling, with shares up greater than 4% (as of this writing).
The tariffs wild card
Administration expects the corporate’s development spurt to proceed. Nvidia is guiding for document second-quarter income of $45 billion, which might signify year-over-year development of fifty%. This was largely consistent with Wall Avenue’s consensus estimates, however the satan is within the particulars. The quantity features a lack of roughly $8 billion in its fiscal Q2 income from the H20 chips, due to the extra stringent export necessities.
Regardless of the hit to its development, buyers stay bullish on Nvidia inventory. Shares are at present promoting for roughly 32 occasions subsequent 12 months’s anticipated earnings. Whereas that is a modest premium, it is nonetheless a sexy worth to pay for an organization anticipated to develop its income by 39% this fiscal 12 months and 35% in its fiscal 2026 — even after the hit to China gross sales.
Nvidia CFO Colette Kress revealed, “Giant cloud service suppliers remained our largest [customers] at slightly below 50% of information heart income.” A fast calculation reveals that 44% of Nvidia’s whole income is at present depending on the world’s largest cloud infrastructure suppliers, together with Amazon Net Providers, Microsoft‘s Azure Cloud, and Alphabet‘s Google Cloud. Honorable point out goes to Meta Platforms, which has additionally considerably scaled up capital expenditures (capex) to construct out its information facilities.
As evidenced by Nvidia’s outcomes, the information heart build-out continues, and the world’s largest tech corporations and cloud suppliers have telegraphed their intention to proceed the heavy spending that has characterised the build-out of AI infrastructure. Nvidia continues to dominate the information heart GPU market, with greater than 90% of the market.
For long-term buyers, this quarter is one information level in a protracted observe document of spectacular execution. Nvidia stays on the coronary heart of the AI revolution, which illustrates that the inventory seemingly has a lot larger to go from right here. It continues to be one in all my highest-conviction shares.
Suzanne Frey, an govt at Alphabet, is a member of The Motley Idiot’s board of administrators. Randi Zuckerberg, a former director of market growth and spokeswoman for Fb and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Idiot’s board of administrators. John Mackey, former CEO of Entire Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. Danny Vena has positions in Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Idiot has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Idiot recommends the next choices: lengthy January 2026 $395 calls on Microsoft and brief January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure coverage.
