Nvidia has projected continued revenue growth for the first quarter of fiscal 2026 (Q1 FY26), reinforcing strong demand for its AI chips. The company expects revenue to reach approximately $43bn, exceeding market forecasts. Gross margins are projected to be around 70.6%, with operating expenses estimated at $5.2bn on a GAAP basis. The company also anticipates an income of approximately $400m from other sources, excluding gains and losses from equity securities.
The latest outlook aims to address concerns about a possible slowdown in AI hardware spending following reports that Chinese AI firms, such as DeepSeek, are developing cost-effective models to rival Western alternatives. Nvidia’s leadership remains confident in the long-term expansion of AI-driven computing needs.
For the fourth quarter ending 26 January 2025, Nvidia reported revenue of $39.3bn, reflecting a 12% increase from the previous quarter and a 78% rise from the same period last year. Data centre revenue, which accounts for the majority of the company’s earnings, surged to $35.6bn, representing a 93% year-over-year growth.
Earnings per diluted share reached $0.89 on a GAAP basis, marking a 14% increase sequentially and an 82% rise year-over-year. On a non-GAAP basis, EPS stood at $0.89, up 10% from the prior quarter and 71% from the same period last year. For the full fiscal year 2025, Nvidia’s total revenue stood at $130.5bn, up 114% from the previous year. The company reported GAAP EPS of $2.94, while non-GAAP EPS was $2.99, both reflecting triple-digit percentage increases compared to the prior year.
Nvidia’s stock initially rose following the earnings release before experiencing fluctuations in after-hours trading. Shares had closed 3.7% higher in regular trading before reacting to the results. The company remains a major driver of AI-related stock market gains, with its share price surging over 400% in the last two years.
The California-based company’s data centre business continues to be the primary growth driver, surpassing analyst estimates. The company has been undergoing a shift in its AI computing strategy, moving beyond selling individual chips to offering complete AI systems that integrate GPUs, processors, and networking components. The company reported $11bn in revenue from Blackwell-related products in the quarter, marking an important milestone in its transition to the new chip architecture. CEO Jensen Huang described demand for Blackwell as “amazing” and highlighted that customers are actively preparing for its deployment. “AI is advancing at light speed,” Huang stated during the earnings call. He explained that AI computing needs are evolving beyond initial training models, with post-training processes requiring significantly more resources. Huang added that future AI models would become even more “thoughtful,” potentially requiring “hundreds of thousands, millions of times, more compute than today.”
While the data centre segment continued to drive Nvidia’s overall revenue growth, its gaming division experienced a decline. Fourth-quarter gaming revenue fell to $2.5bn, down 22% from the prior quarter and 11% year-over-year. However, for the full fiscal year, gaming revenue rose 9% to $11.4bn.
AI industry landscape and competitive pressures
Chinese firms, including DeepSeek, have claimed they can develop AI models at a fraction of the cost of Western alternatives. The rapid expansion of AI chip markets has also led to growing interest in alternative suppliers. Despite these challenges, Nvidia continues to expand its AI ecosystem. The company is focused on scaling its supply chain and strengthening its product offerings to meet increasing demand. Huang stated that AI has “gone mainstream” and is now integrated into everyday consumer services.
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