NVIDIA Reports Impressive Revenue Growth Amid Challenging Export Conditions
NVIDIA Corporation, a leading player in the technology sector, has announced its financial results for the first quarter ending April 27, 2025. The company reported a substantial revenue of $44.1 billion, reflecting a 12% increase from the previous quarter and a remarkable 69% rise compared to the same period last year.
Regulatory Challenges and Financial Impact
On April 9, 2025, NVIDIA was notified by the U.S. government that a license would be required to export its H20 products to China. This new regulatory requirement posed significant challenges for NVIDIA, leading to a $4.5 billion charge in the first quarter of fiscal 2026. The charge was associated with excess inventory and purchase obligations as the demand for H20 products waned. Prior to the imposition of the new export licensing requirements, NVIDIA had recorded $4.6 billion in sales of H20 products for the first quarter of fiscal 2026. However, the company was unable to ship an additional $2.5 billion worth of H20 products during this period.
Financial Performance Metrics
For the first quarter, NVIDIA reported GAAP and non-GAAP gross margins of 60.5% and 61.0%, respectively. Excluding the $4.5 billion charge, the non-GAAP gross margin would have reached 71.3%. The diluted earnings per share (EPS) for GAAP and non-GAAP were $0.76 and $0.81, respectively. Without the impact of the $4.5 billion charge and related tax effects, the non-GAAP diluted EPS for the first quarter would have been $0.96.
AI Advancements and Strategic Developments
Jensen Huang, the founder and CEO of NVIDIA, highlighted the company’s significant advancements in artificial intelligence (AI) technologies. He announced that the Blackwell NVL72 AI supercomputer, a cutting-edge machine designed for reasoning, is now in full-scale production with system makers and cloud service providers. The demand for NVIDIA’s AI infrastructure has skyrocketed, with AI inference token generation increasing tenfold over the past year. As AI agents become mainstream, the demand for AI computing is expected to accelerate further. Huang emphasized that countries worldwide are recognizing AI as essential infrastructure, akin to electricity and the internet, positioning NVIDIA at the center of this transformative wave.
Dividend Announcement
NVIDIA has declared its next quarterly cash dividend of $0.01 per share, scheduled for payment on July 3, 2025, to shareholders of record as of June 11, 2025.
Q1 Fiscal 2026 Financial Summary
GAAP Financial Metrics
- Revenue: $44,062 million, up from $39,331 million in Q4 FY25 and $26,044 million in Q1 FY25, marking a 12% quarter-over-quarter (Q/Q) and 69% year-over-year (Y/Y) increase.
- Gross Margin: 60.5%, a decrease from 73.0% in Q4 FY25 and 78.4% in Q1 FY25.
- Operating Expenses: $5,030 million, a rise of 7% Q/Q and 44% Y/Y.
- Operating Income: $21,638 million, down 10% Q/Q but up 28% Y/Y.
- Net Income: $18,775 million, a decrease of 15% Q/Q but an increase of 26% Y/Y.
- Diluted EPS: $0.76, down from $0.89 in Q4 FY25 but up from $0.60 in Q1 FY25.
Non-GAAP Financial Metrics
- Revenue: $44,062 million, consistent with GAAP figures.
- Gross Margin: 61.0%, a decrease from 73.5% in Q4 FY25 and 78.9% in Q1 FY25.
- Gross Margin Excluding H20 Charge: 71.3%.
- Operating Expenses: $3,583 million, a 6% increase Q/Q and a 43% increase Y/Y.
- Operating Income: $23,275 million, a decrease of 9% Q/Q but an increase of 29% Y/Y.
- Net Income: $19,894 million, down 10% Q/Q but up 31% Y/Y.
- Diluted EPS Excluding H20 Charge and Related Tax Impact: $0.96.
Future Outlook
For the second quarter of fiscal 2026, NVIDIA anticipates:
- Revenue: Approximately $45.0 billion, with a variance of plus or minus 2%. This forecast considers an estimated loss of $8.0 billion in H20 revenue due to recent export control limitations.
- GAAP and Non-GAAP Gross Margins: Expected to be 71.8% and 72.0%, respectively, with a variance of 50 basis points. The company aims to achieve gross margins in the mid-70% range by the end of the year.
- Operating Expenses: Approximately $5.7 billion for GAAP and $4.0 billion for non-GAAP. The full-year fiscal 2026 operating expense growth is projected to be in the mid-30% range.
Strategic Highlights
NVIDIA has made significant strides in various sectors since its last earnings announcement:
Data Center
- Revenue: $39.1 billion for Q1, a 10% increase Q/Q and a 73% increase Y/Y.
- U.S. Factories: Announced plans to build AI supercomputer factories in the U.S.
- NVIDIA Blackwell Ultra and Dynamo: Introduced to accelerate and scale AI reasoning models.
- Saudi Arabia Collaboration: Partnered with HUMAIN to build AI factories driving the next wave of AI development.
Gaming and AI PC
- Gaming Revenue: A record $3.8 billion, up 48% Q/Q and 42% Y/Y.
- NVIDIA GeForce RTX 5070 and RTX 5060: Announced availability, starting at $299 for desktops and $1,099 for laptops.
- Nintendo Switch 2: Powered by NVIDIA processor and AI-powered DLSS, offering up to 4K gaming.
Professional Visualization
- Revenue: $509 million, consistent with the previous quarter and up 19% Y/Y.
- NVIDIA RTX PRO Blackwell Series: Announced for workstations and servers.
Automotive and Robotics
- Automotive Revenue: $567 million, down 1% Q/Q but up 72% Y/Y.
- Collaboration with General Motors: On next-generation vehicles, factories, and robots using NVIDIA technologies.
CFO Commentary and Conference Call
NVIDIA’s executive vice president and chief financial officer, Colette Kress, provided additional insights into the quarter, available on NVIDIA’s investor relations website. The company will also conduct a conference call with analysts and investors to discuss its financial results and outlook.
Non-GAAP Measures Explanation
NVIDIA uses non-GAAP financial measures to provide a more comprehensive understanding of its financial performance. These measures exclude certain items, such as stock-based compensation and acquisition-related costs, to present a clearer view of underlying business performance. The company believes this approach enhances the overall understanding of its financial results.
In summary, despite facing regulatory hurdles, NVIDIA has demonstrated robust growth and continues to advance its strategic initiatives in AI, gaming, and other sectors. With a strong financial performance and strategic developments, NVIDIA remains well-positioned to capitalize on the growing demand for AI infrastructure and computing solutions.
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