SemisEarnings
NVIDIA 1Q26 Results Recap
📅 May 21, 2026🏷️ NVDA · FQ1 2027 · Earnings
Summary: Revenue $81.6B (+85% y/y) beat guide of $78B. Q2 guide $91B ±2% above $87.3B consensus. New reporting framework introduced (Hyperscale / ACIE). Vera CPU opens $200B TAM. $80B buyback + dividend 1¢→25¢. Supply commitments $145B. Vera Rubin on track for Q3. Stock -1.13% after-market (sell-the-news).
FQ1 2027 Financial Performance
NVIDIA delivered results that comfortably exceeded both its own prior guidance and analyst consensus estimates — the 3rd consecutive quarter of y/y acceleration and 14th straight quarter of sequential growth.
| Metric | Actual | Guidance / Consensus |
|---|
| Total Revenue | $81.6B | $78.0B (guidance) / $79.2B (consensus) |
| Net Income | $58.3B | — |
| Non-GAAP Gross Margin | 75.0% | 75.0% |
| Operating Margin | 65.9% | 65.7% (UBSe) |
| Free Cash Flow | $49.0B | $35.0B (prior Q4) |
| Tax Rate | 16.0% | 16-18% (FY guide) |
Segment Breakdown
| Segment | Revenue | QoQ | YoY |
|---|
| Data Center — Hyperscale | $37.9B | +12% | — |
| Data Center — ACIE | $37.4B | +31% | 3x |
| Data Center Total | $75.2B | +21% | +92% |
| Edge Computing | $6.4B | +10% | +29% |
Key stat: Data Center networking revenue reached $15B (nearly 3x y/y). InfiniBand grew more than 4x y/y driven by next-gen XDR technology.
Q2 FY2027 Guidance
| Metric | Guide | Consensus |
|---|
| Revenue | $91B ±2% | $87.3B (UBSe $90.3B) |
| Gross Margin (Non-GAAP) | 75% ±50bps | 74.5% (UBSe 75%) |
| Opex | $8.3B | $7.9B |
| Tax Rate | 16-18% | 17-19% |
Revenue guidance at the high end ($92.8B) implies ~99% y/y growth. Management expressed full confidence in $1T of Blackwell revenue from C2025 through C2027.
New Reporting Framework
Starting FQ1 2027, NVIDIA split Data Center into two sub-markets:
- Hyperscale ($37.9B, ~50% of DC) — large cloud providers, +12% q/q
- ACIE ($37.4B, ~50% of DC) — AI Cloud + Industrial + Enterprise, +31% q/q, 3x y/y
Edge Computing ($6.4B) covers Agentic AI and Physical AI (PCs, game consoles, workstations, AI-RAN, robotics, automotive).
Key Management Commentary
"Agentic AI Has Arrived"
"The buildout of AI factories — the largest infrastructure expansion in human history — is accelerating at extraordinary speed," said Jensen Huang. "Agentic AI has arrived, doing productive work, generating real value and scaling rapidly across companies and industries."
Key data points supporting this narrative:
- OpenAI Codex experiencing breakout growth
- GPT-5.5 (designed for, trained on, and served with Blackwell) now live
- Industry transition from one-shot inference → reasoning → agentic AI
- AI now a "necessity, not a nice-to-have" for productivity across all industries
Vera CPU — $200B New TAM
- Custom ARM cores, co-designed end-to-end with Rubin GPU + NVLink
- 1.5x faster per core, 2x perf/watt, 4x density/rack vs x86 alternatives
- $20B CPU revenue visibility this year
- Positioning to become the world's leading CPU supplier
- $200B TAM — a market NVIDIA never previously addressed
- Every major hyperscaler and system maker is partnering for deployment
Vera Rubin On Track
- Production shipments begin in 2H (Q3 start)
- Seven purpose-built chips across five accelerated racks
- Up to 35x higher inference throughput vs Blackwell
- Up to 10x greater AI factory revenue vs Blackwell
- First systems already live in Microsoft Azure
- Google A5 can support up to 960K Rubin GPUs across multiple sites
Demand Visibility
- Hyperscaler CapEx 2026: over $700B
- Analyst forecast for 2027 hyperscaler CapEx: exceeds $1T
- Supply commitments + inventory + prepaids: $145B
- Full confidence in $1T Blackwell revenue through 2027
- AI infrastructure spending on track to reach $3-4T annually by end of decade
Capital Returns
- Quarterly dividend: $0.01 → $0.25
- New buyback authorization: $80B ($39B incremental vs prior plan)
- ~50% of FCF to be returned to shareholders this year (per GTC commentary)
- Returned a record $20B to shareholders in FQ1
Supply Chain
- Total supply (inventory + purchase commitments + prepaids) at $145B
- Not immune to supply challenges, but confident in ability to support growth
- Key constraints: powered shell availability, leading-edge wafer capacity, DRAM/HBM4
Broker Target Price Updates
| Broker | Rating | Target | Change | Basis |
|---|
| HSBC | Buy | $325 | From $295 (+$30) | 25x FY28 EPS |
| BofA | Buy | $320 | Maintained | 28x CY27 P/E (ex-cash) |
| Huatai | Buy | $310 | Maintained | 25x FY27 Adj PE |
| CLSA | HC-Outperform | $300 | Maintained | 29x FY28 EPS |
| Bernstein | Outperform | $300 | Maintained | Adjusted P/E (CY26 base) |
Source: AlphaSense (May 19-21, 2026)
Market Reaction
- After-market: -1.13% (typical sell-the-news pattern consistent with recent NVDA events)
- Compared to ~5.3% implied vol: actual move was modest — the beat/raise was largely inline with expectations
- Capital returns announcement (buyback + dividend) had been speculated ahead of release
Key Risks
- Gross Margin: Management avoided giving specific margin leverage targets for Rubin platform. Mid-70s GM maintained in Q2 guide.
- Supply Constraints: Powered shell, leading-edge wafers, DRAM/HBM4 remain tight
- China Uncertainty: H200 export licenses approved but zero China DC revenue in outlook. "Have yet to generate any revenue, and uncertain whether any imports will be allowed."
- ASIC Competition: TPU/Trainium long-term could compress GPU profit pool
- Valuation: ~48.8x FY2027 Fwd PE at current price; ~25x FY2028 per CLSA. Forward PE was at 7-year lows (~20-21x) before the print per Greenwich Research.
Notable Details
- Non-GAAP accounting change: Starting this quarter, NVIDIA includes stock-based compensation in non-GAAP measures for better GAAP comparability
- Sovereign AI: Revenue ~$30B in 2025, +80% y/y, deployed in nearly 40 countries representing $50T GDP
- Short interest: S3 Partners reported NVDA had the largest single-stock short in S&P 500 at $62.5B notional, though much of it is AI infrastructure risk hedging
- H100 rental pricing: Up 20% YTD; A100 cloud pricing +15% — demonstrating GPU scarcity and pricing power
- Uber partnership: Will power robotaxi fleet across nearly 30 cities and 4 continents by 2028
- Physical AI: Exceeded $9B in revenue over the last 12 months
Sources: NVDA FQ1 2027 Earnings Call (May 20, 2026), AlphaSense broker research (HSBC/BofA/CLSA/Bernstein/Huatai), User-provided conference call summary. Full verbatim transcript not yet available in research database.
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