- What’s driving these strong numbers, you may ask?
- What Nvidia Numbers Don’t Tell You at First Glance?
- What’s Next for Nvidia?
- Key Takeaway
Nvidia has recently released its first-quarter results for fiscal year 2026 and has significantly outperformed the market's expectations. It has reported revenue of $44.06 billion during the quarter, which is a 69% jump year-on-year (YoY) and a 12% rise quarter-on-quarter (QoQ) basis.
What’s driving these strong numbers, you may ask?
- Strong AI demand and the company’s focus on building Datacenter GPUs are the primary reasons for the growth. In the first quarter, the company's data center segment grew to $39.11B (which accounted for almost 89% of total revenue), spiked 73% YoY, and had a 10% QoQ increase.
- If we look at other segments, Gaming also grew significantly to $3.76 Bn, a 42% YoY and 48% QoQ surge. Pro Viz to $509M, with flat QoQ, up 19% YoY, Auto to $567M, slightly down QoQ basis, but up 72% YoY, and OEM () & Other bringing in $111 million revenue, which has shown a negative growth of 12% on a QoQ basis.
- The company has cash and cash equivalents of $15.2 billion at the end of the quarter. Following the Q1 result, Nvidia's share price opened 5.3% higher today.
| Revenue Segment | Q1 FY26 | Q4 FY25 | Q1 FY25 | QoQ growth | YoY growth |
| Data Center | 39,112 | 35,580 | 22,563 | 9.93% | 73.35% |
| Gaming | 3,763 | 2,544 | 2,647 | 47.92% | 42.16% |
| Professional Visualization | 509 | 511 | 427 | -0.39% | 19.20% |
| Auto | 567 | 570 | 329 | -0.53% | 72.34% |
| OEM & Other | 111 | 126 | 78 | -11.90% | 42.31% |
| TOTAL | 44,062 | 39,331 | 26,044 | 12.03% | 69.18% |
Source: Company filings
What Nvidia Numbers Don’t Tell You at First Glance?
- Margins were hit this quarter. Gross margin came in at 60.5%, down from 73% last quarter. This was due inventory charge of $4.5 billion due to the US government license requirement for exports of its H20 products into the Chinese market.
- Company net income was $18.78B ($0.76/share), down 15% QoQ but up 26% YoY. The export license requirement also contributed to this.
- Nvidia is currently trading at a PE (price-to-earnings) of 45, and if we estimate based on the management guidance, it would still trade at a FY26 forward PE of 37.
- The company has been taking a hit on its bottom line for the last few quarters, and while the future for AI and GPU data centers looks bright, investors should be cautious about the valuation.
| ($ in Mn, except EPS) | Q1 FY26 | Q4 FY25 | Q1 FY25 | QoQ | YoY |
| Revenue | $44,062 | $39,331 | $26,044 | 12% | 69% |
| Gross margin | 60.50% | 73.00% | 78.40% | (12.5) pts | (17.9) pts |
| Operating expenses | $5,030 | $4,689 | $3,497 | 7% | 44% |
| Operating income | $21,638 | $24,034 | $16,909 | -10% | 28% |
| Net income | $18,775 | $22,091 | $14,881 | -15% | 26% |
| Diluted earnings per share | $0.76 | $0.89 | $0.60 | -15% | 27% |
Source: Company filings
What’s Next for Nvidia?
- The company has provided revenue guidance of $45.0 billion, plus or minus 2%, for the 2nd quarter of FY26.
- The company expects a loss in H200 product revenue of approximately $8.0 billion due to the recent export control limitations. This was incorporated into the guidance.
- Management is targeting gross margins of 71.8%, plus or minus 50 basis points in the 2nd quarter and mid-70% for the whole year.
- Nvidia is not just a gaming chip company anymore; it has established itself as the backbone of the AI data center economy. It dominates the data center GPU market (~90 %+ share), powers nearly all major LLMs.
- The Data center ecosystem is not fully mature, and there are expectations of double-digit growth in this space, and Nvidia will gain more market.
Key Takeaway
- Revenue has grown by 69% year on year, and up by 12% QoQ basis.
- Gross margin has been impacted by the inventory charge of $4.5 billion.
- Company data center revenue has hit an all-time high of $44 billion.
- Company net income has increased by 26% on a YoY basis, also 15% down on a QoQ basis.
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