NVIDIA has reported record revenue in its latest earnings, significantly surpassing Wall Street expectations, despite new U.S. export restrictions on AI chips to China. The company's Q1 fiscal 2026 revenue reached $44.1 billion, exceeding analyst predictions of $43.3 billion. This represents a 69% year-over-year increase and a 12% quarter-over-quarter increase.
The surge in revenue is primarily driven by NVIDIA's data center segment, which recorded an all-time high of $39.1 billion in revenue, a massive 73% increase compared to the same quarter last year. This highlights the immense global demand for AI infrastructure. Large cloud service providers such as Amazon, Microsoft, Google, and Meta were the biggest customers, accounting for just under 50% of data center revenue. NVIDIA continues to hold a dominant market share of over 90% in data center GPUs.
While the data center segment dominated, other segments also showed notable performance:
Gaming had a record quarter, hitting $3.8 billion, up 48% from the previous quarter.
Professional visualization came in at $509 million, which is basically flat quarter over quarter.
Automotive was $567 million, down just slightly, like 1% from the prior quarter.
The new U.S. export restrictions, enacted on April 9, 2025, require a license for NVIDIA to export its H20 products to the China market. These H20 chips were specifically designed for China under previous regulations. This policy change had an immediate financial impact in Q1, leading NVIDIA to take a substantial $4.5 billion charge related to excess inventory and purchase obligations for these chips. This charge significantly impacted their reported non-GAAP diluted earnings per share, which stood at $0.81. Excluding the $4.5 billion charge and related tax impact, the non-GAAP EPS would have been $0.96, indicating a $0.15 financial hit from this one policy action.
Despite the restrictions, NVIDIA managed to sell $4.6 billion worth of H20 products in Q1 before the new requirements took full effect. However, an additional $2.5 billion in H20 revenue could not be shipped in the first quarter because of the restrictions kicking in.
Looking ahead, NVIDIA's Q2 revenue guidance is around $45.0 billion, plus or minus 2%. This outlook specifically reflects an estimated loss in H20 revenue of approximately $8.0 billion due to these limitations. Some estimates suggest the total impact from the China restrictions, combining the Q1 charge, the missed Q1 revenue, and this projected Q2 loss, could be somewhere around $15 billion.
Despite these significant financial impacts from the China restrictions, NVIDIA's ability to report record overall revenue and beat analyst expectations highlights the extraordinary strength of global AI infrastructure demand outside of China. Investors reacted very positively to the earnings report, with the stock climbing significantly in after-hours trading, suggesting they looked past the China challenge and focused on the underlying strength and global AI demand story.
CEO Jensen Huang emphasized the robust global demand for NVIDIA's AI infrastructure, stating it is "incredibly strong". He noted that AI inference token generation has surged tenfold in just one year, and as AI agents become mainstream, the demand for AI computing will accelerate. Huang also articulated AI's critical role, comparing it to "essential infrastructure, just like electricity and the Internet," and positioned NVIDIA at the center of this profound transformation.
However, Huang was quite direct about the business pain caused by the China restrictions, describing the restrictions on H20 chip sales to China as "deeply painful and enormously costly". This language underscores the significant business impact these policy decisions are having, even if the overall picture remains strong.
This situation provides a concrete, data-driven example of how high-level geopolitical factors and policy decisions can have a multi-billion-dollar impact on massive global tech companies. It also serves as a key indicator for the broader AI investment landscape, demonstrating how incredibly strong and resilient the global demand for AI infrastructure currently is, even with significant hits from restrictions in a major market like China. The sheer scale of investment and growth reflected in these numbers also helps appreciate the potential pace of AI development and its integration into pretty much every sector imaginable.
Building on Jensen Huang's comment that AI is becoming essential global infrastructure, much like electricity or the Internet, a provocative thought arises: if access to this truly fundamental technology can be so heavily influenced, even restricted by national governments, what are the long-term implications for global collaboration, innovation, and equality in the coming age of AI if access can be turned on or off like a tap based on geopolitics? This goes right to the heart of how technology intersects with international relations and the future landscape of global power.
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