NVIDIA Corp Earnings - Q4 2025 Analysis & Highlights
NVIDIA's Q4 2026 earnings call highlighted record financial performance driven by exceptional data center demand, with management emphasizing the inflection point of agentic AI, the strategic importance of performance-per-watt optimization, and confidence in sustained growth through 2027 despite macroeconomic uncertainties around customer capital expenditure sustainability.
Key Financial Results
Total revenue of $68 billion, up 73% year-over-year, with sequential growth accelerating from Q3.
Data center revenue of $62 billion in Q4, increased 75% year-over-year and 22% sequentially, driven by sustained strength in Blackwell and Blackwell Ultra ramp.
Full-year data center revenue of $194 billion, up 68% year-over-year, with the data center business scaled nearly 13x since the emergence of ChatGPT in fiscal 2023.
GAAP gross margin of 75% and non-GAAP gross margin of 75.2%, increasing sequentially as Blackwell continued to ramp.
Free cash flow of $35 billion in Q4 and $97 billion in fiscal year 2026.
Inventory grew 8% quarter-over-quarter, while purchase commitments increased significantly as the company strategically secured inventory and capacity to meet demand beyond the next several quarters.
Business Segment Results
Data Center: Generated $62 billion in Q4 revenue with nearly nine gigawatts of Blackwell infrastructure deployed and consumed by major cloud service providers, hyperscalers, AI model makers and enterprises.
Networking: Generated $11 billion in revenue in Q4, up more than 3.5x year-over-year, with demand for scale up and scale out technologies reaching record levels driven by strong adoption of NVLink, Spectrum-X Ethernet and InfiniBand. For the full year, networking business exceeded $31 billion in revenue, up more than 10x compared to fiscal 2021, the year NVIDIA acquired Mellanox.
Gaming: Revenue of $3.7 billion, increased 47% year-on-year, driven by strong Blackwell demand and improved supply.
Professional Visualization: Crossed the $1 billion mark for the first time with revenue of $1.3 billion, up 159% year-over-year and 74% sequentially.
Automotive: Revenue of $604 million, up 6% year-over-year, driven by robust demand for self-driving solutions.
Sovereign AI: More than tripled year-over-year to over $30 billion, driven primarily by customers based in Canada, France, the Netherlands, Singapore and the UK.
Capital Allocation
Share repurchases and dividends: The company returned $41 billion, or 43% of free cash flow to shareholders in the form of share repurchases and dividends during fiscal year 2026.
Strategic investments: NVIDIA announced a $10 billion investment in Anthropic and entered into a non-exclusive licensing agreement with Groq for its low-latency inference technology.
Capital return strategy: Management indicated they look at capital return very carefully and believe one of the most important things they can do is support the extreme ecosystem, including suppliers and early developers of AI solutions, while continuing to repurchase stock and maintain dividends.
Industry Trends and Dynamics
Agentic AI inflection: Frontier agentic systems have reached an inflection point, with Claude Code, Claude Cowork and OpenAI Codex achieving useful intelligence, with adoption skyrocketing and tokens becoming profitable, driving extreme urgency to scale up compute.
Transition from classical to generative AI: There is a fundamental platform shift from classical machine learning to generative AI, with strong evidence of ROI as hyperscalers upgrade massive traditional workloads to generative AI, including search, ad generation and content recommender systems.
Token-driven computing model: In this new world of AI, compute directly translates to intelligence and revenue growth, with inference now generating tokens that are profitable for customers and cloud service providers.
Power constraints as critical factor: Every data center is power constrained, with customers making critical architectural decisions based on performance per watt given these constraints and the need to maximize AI factory revenue.
Cloud provider CapEx acceleration: Analyst expectations for 2026 CapEx across the top five cloud providers and hyperscalers, who collectively account for little over 50% of NVIDIA's data center revenue, are up nearly $120 billion since the start of the year and approaching $700 billion.
Physical AI emergence: Physical AI has already contributed north of $6 billion in NVIDIA revenue in fiscal year 2026, with robotaxi rides growing exponentially and commercial fleets from Waymo, Tesla, Uber, WeRide and Zoox expected to scale from thousands of vehicles in 2025 to millions over the next decade.
Competitive Landscape
NVIDIA's inference leadership: SemiAnalysis declared NVIDIA Inference King as recent results from InferenceX reinforced inference leadership, with GB300 NVL72 achieving up to 50x performance per watt and 35x lower cost per token, compared with Hopper.
Continuous optimization advantage: Continuous optimization of CUDA software helped deliver up to five times better performance on GB200 NVL72 just within four months.
Cost and revenue leadership: NVIDIA produces the lowest cost per token and data centers running on NVIDIA generate the highest revenues.
Pace of innovation: NVIDIA's pace of innovation, particularly at its scale, is unmatched, fueled by an annual R&D budget approaching $20 billion and the ability to extreme co-design across compute and networking across chips, systems, algorithms and software.
China competition: Competitors in China, bolstered by recent IPOs, are making progress and have the potential to disrupt the structure of the global AI industry over the long-term.
Ecosystem breadth: NVIDIA is the only accelerated computing platform that is in every cloud, available through every single computer maker, available at the edge, and is cultivating telecommunications, with just about every single robot and self-driving car using NVIDIA technology.
Macroeconomic Environment
Customer cash flow confidence: Management expressed confidence in customer cash flow growing, noting that with the productive use of Codex and Claude Code and the excitement around Claude Cowork and OpenClaw, they are certain the industry is at an inflection point.
China market uncertainty: While small amounts of H200 products for China-based customers were approved by the US government, NVIDIA has yet to generate any revenue and does not know whether any imports will be allowed into China.
Sovereign AI opportunity: Every country will build and operate some parts of its AI infrastructure, just like with electricity and Internet today, with NVIDIA expecting the sovereign opportunity to grow at least in line with the AI infrastructure market as countries spend on AI proportional to their GDP.
Growth Opportunities and Strategies
Rubin platform launch: NVIDIA unveiled the Rubin platform comprised of six new chips including the Vera CPU, Rubin GPU, NVLink 6 Switch, ConnectX-9, SuperNIC, BlueField-4 DPU, and Spectrum-6 Ethernet Switch, which will train MoE models with one-fourth the number of GPUs and reduce inference token costs by up to 10x compared to Blackwell. The company shipped its first Vera Rubin samples to customers and remains on track to commence production shipments in the second half of the year.
Frontier model maker partnerships: NVIDIA significantly deepened and expanded partnerships with leading frontier model makers including OpenAI, Meta, Anthropic, and xAI, positioning itself uniquely to partner with frontier model builders at every stage of training, inference, and AI factory scale out.
Extreme co-design strategy: NVIDIA intends to deliver X factor leaps in performance per watt every generation and extend its leadership position over the long term through extreme co-design across compute and networking.
Robotics and autonomous systems: NVIDIA continues to advance robotics development with new NVIDIA Cosmos and Isaac GROOT open models and frameworks, with partnerships including Boston Dynamics, Caterpillar, Franka Robotics, LG Electronics and NEURA Robotics.
Industrial physical AI acceleration: NVIDIA announced new expanding partnerships with Dassault Systèmes, Siemens and Synopsys to bring NVIDIA AI infrastructure, Omniverse digital twins, world models and CUDA-X libraries to millions of researchers, designers and engineers.
Ecosystem expansion: Management's strategy is to put everybody on NVIDIA by building out the entire AI ecosystem across AI for language, physical AI, AI physics, biology, robotics and manufacturing, with all ecosystems built on top of NVIDIA.
Financial Guidance and Outlook
Q1 FY2027 revenue guidance: Total revenue is expected to be $78 billion, plus or minus 2%, with most growth driven by Data Center and no Data Center compute revenue from China assumed in the outlook.
Gross margin guidance: GAAP and non-GAAP gross margins are expected to be 74.9% and 75%, respectively, plus or minus 50 basis points, with the company continuing to see gross margins in the mid-70s for the full year.
Operating expense guidance: GAAP and non-GAAP operating expenses are expected to be approximately $7.7 billion and $7.5 billion, respectively, including stock-based compensation expense of $1.9 billion, with full-year non-GAAP operating expenses expected to grow in the low 40s on a year-over-year basis.
Tax rate guidance: For full year fiscal year 2027, GAAP and non-GAAP tax rates are expected to be between 7% and 19%, excluding any discrete items and material changes to the tax environment.
Sequential revenue growth: Management expects sequential revenue growth throughout calendar 2026, exceeding what was included in the $500 billion Blackwell and Rubin revenue opportunity shared last year.
Supply visibility: The company believes it has inventory and supply commitments in place to address future demand, including shipments extending into calendar 2027.
Gaming outlook: While end demand for gaming products remains strong and channel inventory levels are healthy, the company expects supply constraints to be a headwind to gaming in Q1 and beyond, with it being too early to determine year-over-year growth potential.
Long-term data center opportunity: Management continues to expect the transition of classic data center workloads to GPU accelerated computing and the use of AI to enhance today's hyperscale workloads to contribute toward roughly half of the company's long-term opportunity.
$3-4 trillion data center CapEx by 2030: Management reiterated confidence in the potential to reach $3 trillion to $4 trillion of data center CapEx by 2030, driven by the inflection of agentic AI and the future inflection of physical AI.
Technology and Architecture Strategy
NVLink innovation: NVLink scale up fabric has revolutionized computing and demonstrates the power of extreme co-design across all chips of the supercomputer and the full stack, with NVLink 72 enabling 50x better performance per watt compared to previous generations.
CUDA architecture advantage: The CUDA architecture is unquestionably more effective and efficient, delivering more performance per flop and per watt than any computing architecture, with architectural compatibility allowing NVIDIA to invest enormously in software engineering knowing the entire installed base benefits.
Vera CPU design philosophy: Vera is the only data center CPU that supports LPDDR5 and is designed to focus on very high data processing capabilities, with single-threaded performance and bandwidth ratio off the charts, making it an excellent CPU for post-training and tool usage in AI pipelines.
Groq integration: NVIDIA entered into a non-exclusive licensing agreement with Groq for its low-latency inference technology and will extend NVIDIA's architecture with Groq's innovations to enable new levels of AI infrastructure performance and value, similar to how the company extended its architecture with Mellanox.
