Earnings Beat Expectations Again
Nvidia Inc. (NASDAQ: NVDA) has again outperformed market expectations with its latest earnings report. The chipmaker posted Q1 revenue of US$44. 1 billion, up 69% year-on-year and 12% quarter-on-quarter. Analysts had expected US$43.3 billion, according to Bloomberg via Yahoo Finance. During the same quarter last year, Nvidia reported US$26 billion in revenue. Shares rose more than 5% in after-hours trade following the report. The company’s stock has rallied more than 40% since 21 April.
Figure 1: Nvidia’s Q1 Fiscal 2026 Summary
Data Centre Segment Powers Growth
The company reported that its data centre segment achieved US$39.1 billion in revenue, up 73% year-on-year. This segment includes processors for AI, data centres, and cloud computing. Continued demand for AI drove the strong result. Chief Executive Jensen Huang attributed growth to several developments in AI applications and infrastructure.
Export Restrictions Impact Sales
Despite the growth, Nvidia took a US$4.5 billion inventory write-down due to new US export restrictions. Last month, the US government informed Nvidia that its H20 chips require special licences for export to China. Nvidia had designed the H20 GPU to comply with earlier export rules from the Biden Administration. These GPUs had already been banned for export to China. The chipmaker lost US$2. 5 billion in revenue this quarter due to halted shipments. The company expects an additional US$8 billion in lost revenue next quarter.
China Market Becomes Less Accessible
Jensen Huang confirmed that Nvidia has no solution to bypass the latest export restrictions. He said the company cannot modify the Hopper product line to comply with the new rules. The restrictions reduce Nvidia’s access to China’s AI accelerator market, worth an estimated US$50 billion.
Growth Continues Despite Setbacks
Nvidia expects Q2 revenue to reach US$45 billion, plus or minus 2%. FactSet reported that analysts had expected US$45.9 billion. Melius Research analyst Ben Reitzes said Nvidia’s guidance implies stronger performance than expected when excluding China losses. CFO Colette Kress highlighted growth in Blackwell, the company’s latest chip family, as a positive factor.
Figure 2: Nvidia expects Q2 revenue to reach US$45 billion
Four Factors Cushion Revenue Losses
Huang identified four unexpected factors helping offset losses from China. He cited increased demand for chips used in reasoning AI and enterprise-level AI agents. He also mentioned the withdrawal of the AI diffusion rule, which would have widened export restrictions. Finally, he pointed to rising demand for industrial AI applications and AI-integrated factories. He said, “AI will be a part of every factory globally as new plants are currently being built.”
Also Read: UK Demands Israel Grant Immediate Humanitarian Access to Gaza
Investors Maintain Confidence
Thomas Martin, a senior portfolio manager at Globalt Investments, noted the solid results despite restrictions. He said, “It’s not the kind of beat that investors have been used to, but the numbers weren’t bad given the issues Nvidia was navigating. ”He added that Nvidia’s adjusted gross margin hit 61%, or 71.3% excluding the writedown, matching analyst expectations.
Share Price Rebounds From Earlier Declines
Nvidia shares remain approximately flat for the year despite significant fluctuations. In February, the stock fell nearly 20% after Chinese startup DeepSeek entered the AI market. In early April, the share price declined further after former US President Donald Trump announced reciprocal tariffs. The stock hit a six-month low of US$87 during that time. News of upcoming export restrictions also affected the stock price in April. At Computex in Taipei, Huang said the export ban cost the company US$15 billion in lost sales.
Valuation Shows Normalised Growth
Nvidia now trades at a forward price-to-earnings ratio of 28. 3, below its five-year average of 40. FactSet data indicates investors expect slower but stable future growth. The company posted 126% revenue growth in fiscal 2024 and 114% in fiscal 2025. Analysts expect 53% growth in fiscal 2026 and 24% in fiscal 2027. Martin stated that Nvidia’s valuation reflects normalised growth that the company can sustain.
Outlook Remains Positive
Investors continue to value role in AI development and infrastructure. Huang’s emphasis on reasoning AI, AI agents, and AI factories signals future demand for products. Despite export challenges, the company’s strategic direction and product evolution support continued growth. The market appears optimistic about Nvidia reaching a new all-time high, with its share price currently about 10% below the peak.
