Nvidia capped off its fiscal year with robust quarterly results, further bolstered by an exceptionally strong outlook for the current quarter, signaling the unyielding momentum of the AI revolution. The chip giant announced fiscal 2026 fourth-quarter revenue surged 73% year-over-year to $68.13 billion, surpassing the $66.2 billion anticipated by analysts, according to data compiled by LSEG. Adjusted earnings per share (EPS) also saw a significant jump of 82% to $1.62, exceeding the consensus estimate of $1.53.
While Nvidia’s stock experienced a slight dip in after-hours trading, this muted reaction is hardly surprising given the sheer scale of its prior rallies. The dramatic post-earnings price swings that characterized the early stages of the AI boom have largely subsided.
**The AI Party Rages On**
Nvidia’s latest earnings report underscores a powerful narrative: the artificial intelligence boom is far from over. The company not only exceeded revenue expectations by approximately $2 billion but also provided guidance for the current quarter that was more than $5 billion above consensus estimates. This is particularly noteworthy as analysts had already factored in substantial capital expenditures from hyperscale cloud providers for the year. In essence, their optimism for the April quarter was justified, though perhaps not ambitious enough.
CFO Colette Kress revealed that Nvidia anticipates sequential revenue growth throughout fiscal 2026, projecting an opportunity exceeding $500 billion for its upcoming Blackwell and Rubin generation chips. Blackwell represents the current architecture, with Rubin slated for release later this year. Kress further indicated that the company has “inventory and supply commitments in place to address future demand, including shipments, extending into calendar 2027,” providing a clear line of sight into sustained demand.
**Margin Resilience and Evolving Demand**
Addressing concerns about rising memory costs and their potential impact on Nvidia’s impressive gross margins, which hover in the mid-70% range, CEO Jensen Huang emphasized that “generational leaps” in performance are the key to maintaining profitability. This suggests that Nvidia’s ability to consistently deliver superior products allows it to pass on increased input costs without compromising its margins.
Kress also offered a compelling insight into the enduring demand for Nvidia’s older data center AI chips, including the Hopper and Ampere architectures. She noted that even these older models are “sold out in the cloud,” a testament to the persistent need for computing power. This comes at a time when some major customers had been scrutinized for extending hardware depreciation schedules. The continued utilization of six-year-old Ampere chips highlights customer confidence in Nvidia’s hardware longevity, reassuring cloud providers that their investments will yield returns for years to come, even as new chip generations emerge annually.
This sustained demand for older generations helps alleviate concerns about customers deferring upgrades, suggesting that while the latest chips are crucial for cutting-edge AI, a significant portion of cloud workloads can still be effectively managed by existing hardware. As AI adoption becomes increasingly critical for businesses, comparable to the early adoption of the internet or mobile technology, the need for compute power is paramount, with Nvidia at the center of this discussion. While custom silicon solutions from companies like Broadcom will cater to specific needs, Nvidia’s dominance in AI computing appears secure for the foreseeable future.
Kress’s commentary on demand trends paints a bullish picture for the year ahead, supported by declared customer spending intentions.
**Segment Performance**
The Data Center segment, Nvidia’s primary revenue driver, experienced accelerated growth of 75% year-over-year, reaching $62.3 billion, exceeding analyst expectations of $60.7 billion. Within this segment, compute revenue rose 58% to $51.3 billion, while networking revenue saw an exceptional surge of 263% to $10.98 billion. Hyperscale customers constituted slightly over 50% of this revenue. Encouragingly, Kress highlighted that growth was also driven by a diversified customer base beyond hyperscalers, which is crucial for long-term stability.
The Gaming segment reported a 47% year-over-year revenue increase to $3.73 billion, though it fell short of the $4.03 billion estimate. This growth was primarily fueled by demand for Nvidia’s new Blackwell architecture. Supply constraints, particularly in memory, are anticipated to be a headwind in the first quarter of fiscal 2027 and beyond.
Professional Visualization revenue skyrocketed by 159%, exceeding expectations due to strong demand for Blackwell-based products. The Automotive segment saw a 6% year-over-year increase, attributed to the ongoing adoption of self-driving platforms. The OEM & Other segment, which encompasses partnerships with original equipment manufacturers and licensing, grew 73% to $161 million.
**Outlook for Fiscal 2027**
Nvidia’s guidance for the first quarter of fiscal 2027 significantly surpassed market expectations. The company projects revenue to be around $78 billion, with a 2% margin of error, substantially higher than the $72.6 billion consensus estimate. Adjusted gross margins are anticipated to be 75%, with a 50 basis point variance. Expected adjusted operating expenses for the quarter are set at $7.5 billion. Importantly, this guidance does not include any sales from China, indicating potential upside should trade relations improve.
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