Nvidia Crushes Earnings as Data Center Sales Surge 73%

• Nvidia (NVDA) reported Q1 revenue of $44.1 billion, up 69% year-over-year, driven by robust AI demand, though shares fluctuated after a $4.5 billion H20 inventory charge impacted earnings.
• Data center revenue soared 73% to $39.1 billion, fueled by Blackwell architecture and hyperscaler demand.
• Despite missing EPS expectations at $0.81 versus $0.93, Nvidia’s Q2 revenue guidance of $45 billion and projected 72% gross margins signal a strong recovery.
• H20 export restrictions cost $2.5 billion in Q1 revenue, with an estimated $8 billion Q2 impact.
• Gaming and automotive segments posted strong gains, while Nvidia’s $27.4 billion cash flow and $53.7 billion cash reserve support ongoing innovation and share repurchases.
• CEO Jensen Huang emphasized Nvidia’s pivotal role in global AI infrastructure with the Blackwell NVL72 supercomputer in full production.

Nvidia (NVDA) reported its fiscal first-quarter earnings after the market closed on Wednesday, showcasing strong results fueled by sustained demand for artificial intelligence (AI) infrastructure. Shares surged $5.34 to $140.84 in after-hours trading, reflecting investor optimism despite regulatory challenges in China. The results underscored Nvidia’s dominance in the AI and data center markets, though a significant inventory charge tied to export restrictions tempered some of the enthusiasm.

Nvidia posted Q1 revenue of $44.1 billion, a robust 69% year-over-year increase, driven primarily by its data center segment, which generated $39.1 billion—up 73% YoY and 10% sequentially. The growth was propelled by the rapid adoption of Nvidia’s Blackwell architecture, a next-generation platform tailored for AI workloads, and strong demand from hyperscalers like Amazon (AMZN), Microsoft (MSFT), and Google (GOOGL). CEO Jensen Huang called the Blackwell NVL72 AI supercomputer a “thinking machine” now in full-scale production, positioning Nvidia at the heart of the global AI infrastructure boom. Huang emphasized that AI inference token generation has surged tenfold in a year, with sovereign AI programs and cloud partnerships expanding Nvidia’s reach.

However, the quarter wasn’t without challenges. A $4.5 billion inventory charge related to Nvidia’s H20 chips, impacted by U.S. export restrictions to China, weighed on profitability. Adjusted EPS came in at $0.81, missing consensus expectations of $0.93, though excluding the charge, EPS would have hit $0.96. Gross margins were 60.5% (GAAP) and 61.0% (non-GAAP), below forecasts, but would have reached an impressive 71.3% without the write-down. The H20 restrictions also led to $2.5 billion in missed Q1 revenue, with an estimated $8 billion impact projected for Q2. Despite these headwinds, Nvidia guided Q2 revenue to $45 billion (±2%), slightly below the $45.5 billion consensus, but projected gross margins to rebound to 72%, signaling confidence in operational recovery.

Beyond data centers, Nvidia’s other segments shone brightly. Gaming revenue hit a record $3.8 billion, boosted by the launch of RTX 5070/5060 GPUs and adoption in Nintendo’s Switch 2. Professional visualization revenue climbed 19% YoY to $509 million, while automotive revenue soared 72% to $567 million, reflecting Nvidia’s growing footprint in autonomous driving. Operating expenses rose 44% YoY, driven by R&D investments and headcount growth, underscoring Nvidia’s commitment to innovation.

Financially, Nvidia remains a cash-generating juggernaut, with $27.4 billion in operating cash flow and a cash pile of $53.7 billion. The company repurchased $14.1 billion in shares and maintained its $0.01 per-share quarterly dividend, payable on July 3, 2025.

Nvidia’s Q1 results cement its role as the backbone of the AI revolution, but the H20 saga highlights geopolitical risks. With Blackwell in high gear and global AI adoption accelerating, Nvidia’s growth story remains compelling, even as Wall Street watches China closely.

WallStreetPit does not provide investment advice. All rights reserved.

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