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Nvidia has once again captured the spotlight with its astounding financial results for the first quarter of fiscal 2026. The company has reported a remarkable revenue of $44.062 billion, marking its most successful quarter to date. This achievement comes amidst an impressive surge in sales across various sectors, both in comparison to the previous quarter and the same period last year. However, the recent ban on shipping H20 GPUs to China has posed significant challenges to Nvidia’s profit margins, highlighting the delicate balance between growth and external market pressures.
Record-breaking revenue growth
For the first quarter of fiscal 2026, Nvidia’s GAAP revenue hit $44.062 billion, reflecting a striking 12% increase quarter-over-quarter (QoQ) and a staggering 69% rise year-over-year (YoY). This explosive growth highlights the company’s strong market position, particularly as it ramps up production of its Blackwell GPUs. Despite these achievements, Nvidia faced a notable decline in gross margin, which dropped to 60.5%. This decline was primarily attributed to a $4.5 billion charge related to the write-down of H20 inventory, a direct consequence of the new U.S. export restrictions imposed in early April.
Understanding Nvidia’s financial dynamics
If we take a closer look, the financial picture becomes even more intriguing. Without the aforementioned charge, Nvidia’s non-GAAP margin would stand at an impressive 71.3%. However, this figure still pales in comparison to previous quarters, with margins of 78.9% in Q1 FY2025 and 73.5% in Q4 FY2025. Operating income totaled $21.6 billion, which is a 10% decline from the previous quarter but represents a 28% increase from the same period last year. Net income reached $18.8 billion, showing a sequential decline of 15% but an increase of 26% YoY.
Data center revenue surges
Nvidia’s data center revenue has set a new benchmark, reaching $39.112 billion. This figure encompasses $34.155 billion in compute revenue and $4.957 billion in networking revenue. The growth trajectory here is impressive, with a 10% increase QoQ and a remarkable 73% growth YoY. This surge can largely be attributed to the rising global demand for AI infrastructure. While Nvidia hasn’t disclosed the exact sales breakdown between Blackwell and Hopper AI GPUs, the company has indicated that the transition to Blackwell is nearing completion. Consequently, the majority of clients are now gravitating towards Blackwell products over the Hopper processors.
The impact of AI on Nvidia’s performance
Jensen Huang, Nvidia’s founder and CEO, emphasized the extraordinary demand for the company’s AI infrastructure, stating, “Our breakthrough Blackwell NVL72 AI supercomputer — a ‘thinking machine’ designed for reasoning — is now in full-scale production across system makers and cloud service providers.” The exponential growth in AI inference token generation, which has surged tenfold in just one year, signifies a burgeoning market for AI computing solutions. As AI applications become increasingly mainstream, the demands on Nvidia’s computing power are expected to accelerate.
Gaming revenue hits new heights
Nvidia’s gaming division also reported a record-breaking revenue of $3.8 billion, a 48% increase from the previous quarter and a 42% rise YoY for the first quarter of FY2025. This impressive growth can be attributed to several factors, including a shortfall in gaming GPU shipments in the previous quarter and the launch of Nvidia’s mainstream GeForce RTX 5070 and 5060-series products, which are built on the Blackwell architecture. The OEM and other segments generated $111 million, reflecting a 12% sequential decline but a notable 42% increase YoY.
Professional visualization and automotive segments
The professional visualization (ProViz) segment reported revenues of $509 million, slightly down from $511 million QoQ, but up 19% from $427 million a year prior. This suggests that workstation manufacturers continue to invest in Ada Lovelace-based professional graphics cards, possibly due to uncertainties surrounding U.S. tariffs and the impending release of Blackwell-based RTX Pro graphics boards. Meanwhile, Nvidia’s automotive and robotics segment generated $567 million, a slight decrease from $570 million in the prior quarter but a substantial 72% increase from $329 million in Q1 FY2025.
Looking ahead: Q2 fiscal 2026 projections
As Nvidia sets its sights on the second quarter of fiscal 2026, the company anticipates revenues of approximately $45.0 billion, with a margin of error of ±2%. Interestingly, Nvidia believes that its Q2 revenue outlook could have been $8.0 billion higher without the export restrictions on H20 units. Furthermore, the company projects GAAP gross margins of 71.8%, with an ambitious goal of reaching mid-70% gross margins later in the year. This projected recovery is attributed to an improved product mix and a normalization following the Q1 inventory charge related to unsellable H20 units.
Investments in research and development
For the second quarter of FY2026, Nvidia anticipates operating expenses to be around $5.7 billion on a GAAP basis, with the majority allocated to research and development (R&D). This focus on R&D underscores Nvidia’s commitment to innovation and maintaining its competitive edge in a rapidly evolving tech landscape. The company’s ability to navigate these challenges while continuing to push the envelope in AI and graphics technology remains a topic of great interest in the tech community.