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Nvidia Soars on Strong Q1 Earnings, Fueled by AI Chip Demand
Nvidia (NVDA) has once again defied expectations, reporting stellar first-quarter earnings that sent its stock surging in extended trading. The company's financial results, released Wednesday after the bell, underscore its dominance in the burgeoning artificial intelligence (AI) market.
The numbers speak for themselves:
- Earnings per share (adjusted): 96 cents vs. 93 cents estimated
- Revenue: $44.06 billion vs. $43.31 billion estimated
This impressive performance was largely driven by Nvidia's booming data center business, which experienced a remarkable **73% year-over-year growth**. The demand for its AI chips, crucial for powering applications like OpenAI's ChatGPT, shows no signs of slowing down.
Guidance and Geopolitical Headwinds
Looking ahead, Nvidia anticipates approximately **$45 billion** in sales for the current quarter. However, it's worth noting that this forecast is slightly below LSEG estimates of $45.9 billion, primarily due to the impact of recent export restrictions on its H20 chips destined for China.
The company revealed that it incurred **$4.5 billion in charges** related to excess inventory for the restricted chip and estimated that it would have recorded an additional **$2.5 billion in sales** without these limitations.
Gross Margin Impacted by China Restrictions
The China-related charges also affected Nvidia's gross margin, which stood at **61%** for the quarter. The company stated that this figure would have been a much higher **71.3%** without the impact of these restrictions.
CEO Jensen Huang's Optimistic Outlook
Despite the geopolitical headwinds, Nvidia CEO Jensen Huang remains bullish on the company's prospects. "Global demand for Nvidia's AI infrastructure is incredibly strong," Huang said in a statement, emphasizing the company's continued growth trajectory.
Key Financial Highlights:
- Net income: Increased 26% to $18.8 billion (76 cents per share) from $14.9 billion (60 cents per share) year-over-year.
- Revenue: Rose 69% to $44.06 billion from $26 billion a year earlier.
- Data Center Revenue: Grew 73% to $39.1 billion, representing 88% of total revenue.
Data Center Deep Dive
Nvidia highlighted that large cloud providers accounted for just under half of the data center unit's revenue. The company also reported **$5 billion in sales** for its networking products, which are essential for connecting numerous Nvidia chips in AI research environments.
CFO Colette Kress revealed that Microsoft has "deployed tens of thousands of Blackwell GPUs and is expected to ramp to hundreds of thousands" of the company's GB200 product, largely due to its collaboration with OpenAI.
Gaming and Automotive Divisions Contribute to Growth
- Gaming Division: Grew 42% to $3.8 billion, driven by chips for 3D games.
- Automotive and Robotics Division: Reported sales growth of 72% to $567 million, attributed to increased sales of chips and software for self-driving cars.
- Professional Visualization Business: Increased 19% to $509 million in revenue.
Share Repurchases and Dividends
Nvidia demonstrated its commitment to returning value to shareholders by spending **$14.1 billion on share repurchases** and paying **$244 million in dividends** during the quarter.
Market Reaction and Future Outlook
Based on extended trading, Nvidia shares are now less than 5% below their record high reached in January and are at their highest in four months. This surge reflects investor confidence in the company's ability to capitalize on the growing demand for AI solutions and overcome challenges posed by geopolitical factors. Nvidia's Q1 earnings solidify its position as a leader in the AI revolution, promising continued innovation and growth in the years to come.
Tags: Nvidia, Jensen Huang, Earnings, Revenue, Data center, Stock, China, H20 chip, Export restriction, Sales, AI, Artificial Intelligence
Source: https://www.cnbc.com/2025/05/28/nvidia-nvda-earnings-report-q1-2026.html
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