AI demand fuels growth, but $4.5bn H20 write-down weighs on bottom line
NVIDIA (NASDAQ: NVDA) reported record first-quarter fiscal 2026 revenue of US$44.1bn, up 12% from the previous quarter and 69% year-on-year, powered by surging demand for its AI infrastructure despite a significant US$4.5bn charge tied to new export restrictions to China.
The US government informed NVIDIA on April 9 that a licence would be required to export its China-targeted H20 products. That decision triggered a write-down on excess inventory and purchase obligations, slashing gross margins and net income. Sales of H20 chips reached US$4.6bn prior to the restriction, but the company was unable to ship an additional US$2.5bn in potential revenue during the quarter.
Adjusted for the H20 charge, non-GAAP gross margin would have reached 71.3%. Instead, GAAP and non-GAAP gross margins came in at 60.5% and 61.0%, respectively. GAAP diluted earnings per share fell to US$0.76, while non-GAAP EPS was US$0.81; excluding the H20 impact, EPS would have been US$0.96.
CEO Jensen Huang said NVIDIA’s Blackwell NVL72 “thinking machine” is now in full-scale production, adding that AI inference token generation had surged tenfold in a year and that “AI computing will accelerate” as agents become mainstream.
Data Center revenue reached a record US$39.1bn, rising 10% quarter-on-quarter and 73% from a year ago. Gaming posted US$3.8bn, up 48% from Q4, while Automotive and Robotics rose 72% year-on-year to US$567m. Professional Visualization revenue was flat at US$509m.
For the current quarter, NVIDIA expects revenue of US$45bn (±2%), despite an estimated US$8bn loss in H20 sales. GAAP and non-GAAP gross margins are forecast at 71.8% and 72.0%, respectively. Operating expenses are projected at US$5.7bn GAAP and US$4.0bn non-GAAP.
In parallel, NVIDIA has expanded global AI infrastructure initiatives, launching partnerships in the US, Saudi Arabia, Taiwan and the UAE, and introducing Blackwell Ultra GPUs, NVLink Fusion, and DGX Cloud Lepton. Its Blackwell platform also set new records in the MLPerf inference benchmarks.
The company will pay its next quarterly dividend of US$0.01 per share on July 3, 2025.
