Nvidia(NVDA) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - NVIDIA reported revenue of $44 billion, a 69$39 billion, growing 73% year-on-year [6] - GAAP gross margins were 60.561%, while non-GAAP gross margins would have been 71.3% excluding a $4.5 billion charge related to inventory write-downs [31][33] Business Line Data and Key Metrics Changes - Data center revenue was significantly impacted by new export controls, with$4.6 billion recognized prior to the controls and a $4.5 billion charge for inventory write-downs [7][31] - Gaming revenue reached a record$3.8 billion, increasing 48% sequentially and 42% year-on-year, driven by strong adoption of Blackwell architecture [22][23] - Pro Visualization revenue was flat sequentially at $5.9 billion but up 19$567 million, down 1% sequentially but up 72% year-on-year, driven by self-driving technology and demand for new energy vehicles [28] Market Data and Key Metrics Changes - China data center revenue was slightly below expectations due to export licensing controls, with a meaningful decrease anticipated in Q2 [21][22] - Singapore represented nearly 20% of Q1 build revenue, primarily for US-based customers [22] Company Strategy and Development Direction - NVIDIA is focusing on AI infrastructure, with plans to build AI factories globally, emphasizing the importance of AI in various industries [14][62] - The company is committed to a multi-year product roadmap extending through 2028, with a focus on enhancing AI capabilities and infrastructure [11][12] - NVIDIA is exploring limited options to supply data center products compliant with new export control rules, acknowledging the competitive landscape in AI [9][38] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about losing access to the China AI accelerator market, which could have a material adverse impact on business [9] - The company anticipates continued ramp-up of Blackwell products, partially offset by declines in China revenue, with total revenue expected to be around $45 billion in Q2 [32][33] - Management highlighted the exponential growth in reasoning AI and its implications for future demand and infrastructure needs [62][84] Other Important Information - NVIDIA returned a record$14.3 billion to shareholders through share repurchases and dividends [32] - The company is actively investing in onshore manufacturing and partnerships to strengthen its supply chain [45][46] Q&A Session Summary Question: How much of the inference demand is NVIDIA able to serve? - Jensen Huang stated that NVIDIA aims to serve all inference demand and is on track to do so, highlighting the capabilities of the Grace Blackwell NVLink 72 for reasoning AI [53][54] Question: What is the impact of China on revenue guidance? - Colette Kress clarified that the company recognized $4.6 billion in H20 revenue in Q1 and expects a significant decline in China data center revenue in Q2 due to export controls [60][61] Question: What are the drivers of growth for the AI infrastructure? - Jensen Huang identified four positive surprises driving growth: increased demand for reasoning AI, the rescinding of the AI diffusion rule, the rise of enterprise AI, and the emergence of industrial AI [82][84] Question: Are there more large GPU cluster investments expected? - Jensen Huang confirmed that there are more orders than previously discussed and that many AI factories are being planned globally, indicating a strong future demand for AI infrastructure [70][72] Question: What is the outlook for the networking business? - Jensen Huang highlighted the success of Spectrum X and its adoption among major CSPs, emphasizing the importance of low latency and high performance in AI networking solutions [100]