NVIDIA Q1 FY26 Earnings Report (Ended April 27, 2025)
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Key Financial Highlights:
• Revenue: $44.1 billion, up 12% from the previous quarter and 69% from a year ago.
• Gross Margin (GAAP): 60.5%. This was impacted by a $4.5 billion charge related to H20 product export restrictions to China. Excluding this charge, the non-GAAP gross margin would have been 71.3%.
• Diluted Earnings Per Share (GAAP): $0.76. Excluding the H20 charge and related tax impact, non-GAAP diluted EPS would have been $0.96.
• Data Center Revenue: $39.1 billion, up 10% from the previous quarter and 73% from a year ago. This continues to be the primary growth engine.
• Gaming Revenue: $3.8 billion, a record high, up 48% from the previous quarter and 42% from a year ago.
• Automotive Revenue: $567 million, down 1% from the previous quarter but up 72% from a year ago.
• Professional Visualization Revenue: $509 million, flat quarter-over-quarter, up 19% year-over-year.
Impact of China Export Restrictions:
• NVIDIA incurred a $4.5 billion charge in Q1 FY26 due to excess inventory and purchase obligations of its H20 products, as demand for these chips diminished after new U.S. government export licensing requirements for China.
• The company was also unable to ship an additional $2.5 billion of H20 revenue in Q1 FY26.
NVIDIA recently announced its financial results for the first quarter of fiscal year 2026 (Q1 FY26), which ended on April 27, 2025. Here's a breakdown of the report, a comparison with the previous quarter (Q4 FY25), and the CEO's outlook:
Comparison vs. Previous Quarter (Q4 FY25 ended January 26, 2025)
Metric Q1 FY26 (Current Quarter) Q4 FY25 (Previous Quarter) Quarter-over-Quarter Change
Revenue $44.1 billion $39.3 billion Up 12%
Gross Margin (GAAP) 60.5% 73.0% Down 12.5 percentage points
Gross Margin (Non-GAAP) 61.0% 73.5% Down 12.5 percentage points
Diluted EPS (GAAP) $0.76 $0.89 Down 15%
Diluted EPS (Non-GAAP) $0.81 $0.89 Down 9%
Data Center Revenue $39.1 billion $35.6 billion Up 10%
Gaming Revenue $3.8 billion Approximately $2.6 billion (Q1 FY25 was $2.6B, Q4 FY24 was $2.86B) Up significantly (48%)
Automotive Revenue $567 million N/A (previously $329 million in Q1 FY25) Down 1%
Key takeaways from the comparison:
Continued Revenue Growth: NVIDIA maintained strong top-line growth, with revenue increasing by 12% quarter-over-quarter, driven primarily by its Data Center segment.
Gross Margin Impact: The most significant change was the notable decline in gross margin and EPS, primarily due to the H20-related charges stemming from China export restrictions. Without this one-time impact, margins would have been considerably higher.
Data Center Dominance: The Data Center segment continued its robust growth, solidifying its position as NVIDIA's main revenue driver.
Gaming Rebound: Gaming showed a remarkable sequential recovery, indicating strong consumer demand.
CEO's Outlook (Jensen Huang)
Jensen Huang, NVIDIA's CEO, provided a highly optimistic outlook despite the immediate challenges from export restrictions. Key themes from his commentary include:
AI as the Next Industrial Revolution: Huang emphasized that AI is growing faster and will be larger than any prior platform shifts, including the internet, mobile, and cloud. He believes AI will bring significant productivity gains to nearly every industry and is essential infrastructure for every economy.
Sustained AI Demand: He highlighted the "step function surge" in inference demand driven by reasoning models, indicating that AI scaling laws remain firmly intact for both training and inference.
Global AI Infrastructure Build-Out: Huang noted that every nation is racing to build national AI platforms, leading to a global demand for AI infrastructure. He mentioned that "hundreds of AI factories" are being planned and built worldwide.
Blackwell Platform and Supply Chain: He confirmed that Blackwell production is scaling, and gross margins are expected to recover as production optimizes. NVIDIA is actively building out its supply chain, including in the U.S., and expects the supply chain to be "quite busy for several many more years coming."
Addressing China Export Controls: Huang acknowledged the impact of U.S. export restrictions, noting that they are driving China to innovate internally. He stated that the policy assumptions that China cannot make AI chips are "clearly wrong" and that shielding Chinese chipmakers only strengthens them abroad and weakens America's position. He stressed that the question is whether one of the world's largest AI markets will run on American platforms.
Outlook for Q2 FY26: NVIDIA expects revenue for the second quarter of fiscal 2026 to be approximately $45.0 billion, plus or minus 2%. This outlook already reflects an estimated loss of $8.0 billion in H20 revenue due to the export control limitations. Gross margins are expected to recover to around 71.8% to 72.0% (GAAP and non-GAAP), with a target of mid-70% by late this year.
In summary, NVIDIA's recent earnings report showcased continued strong demand for its AI products, particularly in data centers, even as it navigates the complexities of export restrictions to China. CEO Jensen Huang's outlook remains highly bullish on the transformative power of AI and NVIDIA's leading role in building the foundational infrastructure for this new era.
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