NVIDIA Fiscal First Quarter 2026 Earnings: Performance Amidst Geopolitical Headwinds

Executive Summary

NVIDIA reported robust financial results for its fiscal first quarter of 2026, which concluded on April 27, 2025. The company’s performance notably surpassed Wall Street’s expectations for both revenue and adjusted earnings per share (EPS). This strong showing was primarily propelled by the sustained and accelerating demand for its Data Center products, a direct consequence of the ongoing global buildout of artificial intelligence (AI) infrastructure.¹

Despite the impressive top-line growth, the quarter was significantly affected by new U.S. export control limitations on sales to China. These restrictions led to a substantial $4.5 billion charge related to H20 excess inventory and purchase obligations, which impacted NVIDIA’s reported GAAP gross margins and net income.¹ 

Following the earnings announcement, NVIDIA’s stock exhibited positive movement in after-hours trading, indicating that investors largely focused on the underlying strength of the AI market and NVIDIA’s dominant position within it, rather than being deterred by the short-term geopolitical challenges.³ 

This market reaction suggests a prevailing belief that the fundamental demand for AI infrastructure and NVIDIA’s leadership are paramount considerations, outweighing the financial impact of export controls.

Fiscal First Quarter 2026 Financial Highlights

NVIDIA achieved record revenue of $44.1 billion for Q1 FY26, marking a 69% year-over-year (YoY) increase and a 12% sequential rise from Q4 FY25. This performance exceeded the consensus Wall Street estimate of $43.2 billion.¹

The company’s non-GAAP diluted earnings per share (EPS) reached $0.81, surpassing analyst expectations of $0.75.¹ It is important to note that, excluding the $4.5 billion H20 charge and its related tax impact, the non-GAAP diluted EPS would have been $0.96.² 

This significant difference between reported and adjusted non-GAAP figures highlights the direct financial consequence of the U.S. export controls. The underlying operational profitability and demand for NVIDIA’s products remain very strong, with the geopolitical factor acting as a distinct, quantifiable drag on reported results. GAAP EPS for the quarter was $0.76 per diluted share.² Non-GAAP net income stood at $19.89 billion, while GAAP net income was $18.775 billion.² The reported non-GAAP gross margin was 61.0%. However, if the $4.5 billion H20 charge were excluded, the non-GAAP gross margin would have been 71.3%.² This compares to a non-GAAP gross margin of 73.5% in the previous quarter.²The Data Center segment continued to be the primary driver of growth, generating $39.1 billion in revenue, representing a 73% YoY increase and a 10% sequential rise. This segment alone accounted for nearly 89% of NVIDIA’s total revenue.² The overwhelming contribution of the Data Center segment underscores NVIDIA’s foundational role in the global AI infrastructure expansion. As AI continues to proliferate, NVIDIA’s performance will serve as a key indicator for the health and growth trajectory of the entire AI industry.

Other segments also contributed to the company’s performance:

• Gaming: Achieved a record $3.8 billion in revenue, up 42% YoY and 48% sequentially.²
• Professional Visualization: Revenue was $509 million, an increase of 19% YoY but flat sequentially.²
• Automotive and Robotics: Revenue reached $567 million, growing 72% YoY but experiencing a 1% sequential decrease.²

Table 1: NVIDIA Fiscal Q1 2026 Key Financial Metrics

Table 2: NVIDIA Fiscal Q1 2026 Revenue by Platform

Impact of Export Control Limitations

The new U.S. government restrictions on chip exports to China, enacted on April 9, 2025, had a direct and significant financial impact on NVIDIA. The company incurred a $4.5 billion charge in Q1 FY26 due to excess H20 inventory and purchase obligations.¹ Furthermore, NVIDIA was unable to ship an additional $2.5 billion of H20 revenue in Q1 that had been committed prior to these new requirements.²

Looking ahead, NVIDIA’s revenue guidance for Q2 FY26 explicitly accounts for an anticipated loss of approximately $8.0 billion in H20 revenue due to these ongoing export control limitations.¹ This quantifies the ongoing, material impact of geopolitical trade policies on NVIDIA’s near-term revenue potential. It demonstrates that these are not merely theoretical risks but realized financial burdens that will continue to affect the company’s performance into the next quarter.

CEO Jensen Huang voiced strong opinions regarding the export controls during the earnings call, stating that “export restrictions have spurred China’s innovation and scale” and that policy assumptions suggesting China cannot produce AI chips are “clearly wrong”.³ He emphasized that the critical question is not whether China will develop AI, as it already possesses the capability, but “whether one of the world’s largest AI markets will run on American platforms”.³ This perspective highlights a fundamental tension between government policy objectives and corporate strategic interests. The current policy, according to Huang, may inadvertently accelerate China’s self-sufficiency in AI chip production, potentially leading to a bifurcated global AI ecosystem.3NVIDIA’s CFO, Colette Kress, further elaborated that these restrictions prevent NVIDIA from accessing a China AI accelerator market that is projected to grow to nearly $50 billion. She stated that such restrictions “would have a material adverse impact on our business going forward, and benefit our foreign competitors in China and worldwide”.³ This underscores the potential long-term challenge to NVIDIA’s market share in a significant global economy, necessitating strategic pivots such as “sovereign AI” initiatives ¹ to maintain global relevance.

Industry Analyst Commentary

Industry analysts largely responded positively to NVIDIA’s earnings report, emphasizing the company’s continued strength in the AI sector despite the noted headwinds. We can expect earnings breakdowns from the usual suspects like Daniel Newman, Patrick Moorhead, Bob O’Donnell, as well as Constellation and others, in the coming days. Moorhead and Newman were both featured on a variety of news broadcasts in both the US and China this week talking about the earnings report. Both have offered commentary via LinkedIn and X. 

Wedbush analyst Dan Ives characterized NVIDIA’s performance as “another robust quarter handily beating the Street yet again,” and described the report as “Bullish for tech”.³ This reflects a broad market consensus that demand for NVIDIA’s AI systems remains strong and is poised for continued growth.³

James Demmert, Chief Investment Officer at Main Street Research, commented on NVIDIA’s stock valuation, noting, “We see the stock as attractive at current levels.” He further explained that “Nvidia’s stock is trading at about the same price as almost a year ago – but their earnings have almost doubled”.¹ These analyst perspectives reinforce the market’s strong belief in the long-term AI growth narrative and NVIDIA’s central role within it. The positive outlooks are directly tied to NVIDIA’s strong earnings performance, even with the H20 charge, and CEO Jensen Huang’s optimistic long-term vision for AI. This suggests that the fundamental demand for AI infrastructure and NVIDIA’s leadership are paramount considerations, effectively discounting the export controls as a temporary or manageable challenge.CEO Jensen Huang’s remarks during the conference call, where he likened AI to “electricity and the internet” and asserted that “every country will have it” and “every industry will use” AI, were highlighted by several sources. These statements are seen as inspiring and reinforcing the long-term AI growth narrative, indicating a high degree of confidence in the continued “AI buildout”.¹

Fiscal Second Quarter 2026 Outlook

NVIDIA provided guidance for its fiscal second-quarter 2026 revenue to be approximately $45.0 billion, plus or minus 2%.¹ This guidance falls below Wall Street’s consensus expectations, which ranged from $45.9 billion (FactSet) to $45.75 billion (Visible Alpha).¹

The Q2 revenue outlook explicitly reflects an anticipated loss of approximately $8.0 billion in H20 revenue due to the recent export control limitations.¹ This direct attribution quantifies the ongoing, material impact of geopolitical factors on NVIDIA’s near-term revenue potential. It suggests that while core demand remains high, geopolitical factors represent a significant and persistent headwind that analysts will need to factor more prominently into their models.For Q2, GAAP and non-GAAP gross margins are projected to be 71.8% and 72.0%, respectively, plus or minus 50 basis points. Management reiterated its objective of achieving gross margins in the mid-70% range later in the year.¹ Operating expenses for Q2 FY26 are estimated to be approximately $5.7 billion (GAAP) and $4.0 billion (non-GAAP), with full-year fiscal 2026 operating expense growth expected in the mid-30% range.²

Conclusion and Key Takeaways

NVIDIA’s fiscal first-quarter 2026 performance reaffirms its dominant position in the AI computing market, demonstrating significant revenue and adjusted EPS growth primarily driven by its Data Center segment. The company’s ability to exceed expectations despite external pressures highlights the robust underlying demand for its core AI products.

However, the quarter was markedly impacted by the U.S. export control limitations on H20 products to China. This resulted in a substantial $4.5 billion charge in Q1 and a projected $8.0 billion revenue loss for Q2, underscoring the tangible financial consequences of geopolitical tensions on a global technology leader.

Despite these headwinds, the market’s positive reaction to the earnings report and supportive analyst commentary reflect strong confidence in NVIDIA’s long-term growth trajectory within the expanding AI ecosystem. The prevailing sentiment views AI as “essential infrastructure,” comparable to electricity and the internet, suggesting that the market is willing to look past short-term geopolitical disruptions due to the immense long-term potential of AI.

NVIDIA’s strategic emphasis on diversifying its AI infrastructure buildout globally, including initiatives like “sovereign AI” and fostering domestic manufacturing partnerships, appears to be a direct and necessary response to navigating these complex geopolitical challenges while continuing to capitalize on the pervasive demand for AI.