Nvidia Extends AI Rally With Robust Quarterly Results

Key Moments

Market Reaction to Earnings and Outlook

Chip designer Nvidia delivered January-quarter results that exceeded Wall Street expectations and issued a revenue forecast ahead of market estimates for the current period, supported by ongoing heavy spending by major technology companies on its artificial-intelligence processors.

Despite the beat-and-raise performance, Nvidia’s shares traded flat in after-hours trading. Investors, who have seen the company outpace revenue expectations for 14 consecutive quarters, appeared unimpressed by what some viewed as a relatively uneventful release that arrived about 10 minutes later than anticipated.

On the post-earnings call, UBS analyst Tim Arcuri pressed management on whether Nvidia planned to return more of the roughly $100 billion in cash it was likely to generate this year to shareholders, noting that “no matter how good the results have been, the stock hasn’t really gone up much.” Chief Financial Officer Colette Kress responded that the company intends to continue directing capital toward investments in the AI ecosystem.

Chief Executive Jensen Huang emphasized that Nvidia is committed to expanding the infrastructure that underpins AI workloads, stating that AI-generated output will form the basis of future computing. “This new way of doing computing is not going to go back,” he said.

Guidance, Supply Dynamics, and Segment Impact

Nvidia projected fiscal first-quarter revenue of $78 billion, plus or minus 2%. Analysts had expected $72.60 billion on average, according to LSEG data.

Addressing investor concerns about potential supply bottlenecks at contract manufacturer TSMC, Nvidia said it has secured sufficient chip inventory and production capacity to satisfy demand beyond the next several quarters. The company cautioned, however, that ongoing supply constraints will weigh on its gaming segment.

Ken Mahoney, CEO at Mahoney Asset Management, which owns Nvidia shares, said, “This was a good beat and raise, the usual for Nvidia, but based on the reactions preliminarily, it seems a lot was baked in to the cake so far.”

Quarterly Performance Snapshot

For the January quarter, Nvidia’s revenue and earnings outpaced analyst expectations, underscoring the strength of AI-related demand.

AI Spending and Customer Concentration

The latest results offered reassurance for investors focused on AI, who are closely monitoring Nvidia as a barometer of whether the substantial capital that major technology firms are channeling into data-center infrastructure is translating into tangible returns. Hyperscale customers, including Meta Platforms – a significant Nvidia client – have outlined total capital expenditure plans of at least $630 billion in 2026, with a substantial portion directed toward data centers and processors.

“It’s clear from Nvidia’s latest numbers and their forecast that concerns about an AI slowdown simply are not showing up yet,” said Bob O’Donnell, chief analyst at TECHnalysis Research.

Even so, there are emerging risks to Nvidia’s entrenched position in AI accelerators. Smaller competitor AMD is preparing to introduce a new flagship AI server product later this year and has secured agreements with several of Nvidia’s largest customers, including Meta. Alphabet’s Google has also become a notable rival through its arrangement to provide Claude chatbot developer Anthropic with its proprietary TPU chips. According to media reports, Google is in discussions to also supply Meta.

Large technology companies are increasingly developing their own custom chips, which they are deploying across their data centers in a bid to enhance computing efficiency and control key components of their AI infrastructure.

Nvidia’s reliance on a limited number of major buyers increased during its recently completed fiscal 2026. Two customers accounted for 36% of sales, compared with the prior fiscal year when three customers represented 34% of total revenue.

China Exposure and Regulatory Constraints

Nvidia stated that its current-quarter revenue outlook does not factor in any anticipated sales of data-center chips to China. However, the company disclosed that it obtained licenses earlier this month from the U.S. government to ship “small amounts” of its H200 products to Chinese customers, following previous export restrictions.

By contrast, rival AMD has restored projected AI chip sales to China into its own current-quarter forecast after receiving approvals to export certain modified processors to that market.

Compensation Policy and Talent Competition

Nvidia also announced that it will begin including stock-based compensation expenses in its non-GAAP financial metrics. The change comes as technology companies intensify efforts to recruit and retain leading AI talent.

“Stock-based compensation is a foundational component of Nvidia’s compensation program to attract and retain world-class talent,” the company said in a statement.