NVIDIA posted revenue of $44.1 billion for the first quarter. This represented a 12% increase on the previous quarter and a 69% jump compared to the same period last year.
However, the quarter was not without significant challenges. On 9th April 2025, the US government informed NVIDIA that exports of its H20 AI products to China would require a new licence. This development led to a substantial $4.5 billion charge associated with excess inventory and purchase obligations for H20, following a sharp drop in demand. Prior to the restrictions, NVIDIA reported $4.6 billion in H20-related sales during the quarter, but the new controls prevented the shipment of an additional $2.5 billion in revenue.
Gross margins were impacted by the charge. GAAP and non-GAAP gross margins for the quarter stood at 60.5% and 61.0%, respectively. Excluding the charge, the non-GAAP gross margin would have been 71.3%.
GAAP and non-GAAP earnings per diluted share were $0.76 and $0.81, respectively. Without the impact of the H20-related charge and associated tax effects, non-GAAP diluted earnings per share would have reached $0.96.
“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,” said Jensen Huang, Founder and CEO of NVIDIA. “Global demand for NVIDIA’s AI infrastructure is incredibly strong. AI inference token generation has surged tenfold in just one year, and as AI agents become mainstream, the demand for AI computing will accelerate. Countries around the world are recognising AI as essential infrastructure – just like electricity and the Internet – and NVIDIA stands at the centre of this profound transformation.”
NVIDIA’s outlook for the second quarter of fiscal 2026 is as follows:
- Revenue is expected to be $45.0 billion, plus or minus 2%. This outlook reflects a loss in H20 revenue of approximately $8.0 billion due to the recent export control limitations
- GAAP and non-GAAP gross margins are expected to be 71.8% and 72.0%, respectively, plus or minus 50 basis points. The company is continuing to work toward achieving gross margins in the mid-70% range late this year
- GAAP and non-GAAP operating expenses are expected to be approximately $5.7 billion and $4.0 billion, respectively. Full year fiscal 2026 operating expense growth is expected to be in the mid-30% range
- GAAP and non-GAAP other income and expense are expected to be an income of approximately $450 million, excluding gains and losses from non-marketable and publicly-held equity securities
- GAAP and non-GAAP tax rates are expected to be 16.5%, plus or minus 1%, excluding any discrete items
Kate Leaman, Chief Market Analyst at AvaTrade, comments: “NVIDIA just reported a very strong quarter, showing it’s still leading the way in AI chips, even with some global challenges (particularly in China). The company made $44.1 billion in revenue, which is 69% more than the same time last year, beating Wall Street expectations. A big part of that came from its data centre business, which brought in $39.1 billion amid more companies demanding AI technology. NVIDIA also earned $0.96 per share, higher than analysts had predicted.
“However, there were some setbacks. US restrictions on chip exports to China hurt NVIDIA’s sales of its H20 chips. This caused a $4.5 billion inventory write-down and $2.5 billion in lost sales. Looking ahead, NVIDIA expects it could lose up to $8 billion in revenue next quarter because of these restrictions. Still, strong global demand is helping push the company forward.
“Adding to this, NVIDIA is moving ahead with major innovations. For instance, the company’s new Blackwell NVL72 AI supercomputer is now being produced, while it is also expanding its reach by building new AI centres in Saudi Arabia and Taiwan, as well as opening a quantum computing lab in Boston.
“In short, NVIDIA had a standout quarter. Even with political and trade issues, it’s leading the AI boom. The market confidence is clearly there.”
