Author: Li Dan, Wall Street Insights
Original Title: Cooling AI Anxiety! Nvidia's Q4 Earnings Report is the Best "Tranquilizer"
Amid recent product releases from Anthropic and Citrini's "Doomsday Report" heightening investor anxiety, the artificial intelligence (AI) boom faced a direct test. Nvidia delivered "blockbuster" performance, proving that the demand generated by AI remains robust.
On Wednesday, US Eastern Time, February 25th, Nvidia announced that for the fourth quarter ("Q4") of fiscal year 2026, ended January 31, 2026, revenue reached a record $68.1 billion, a year-over-year increase of approximately 70%. The core business, data centers, which contributes over 90% of revenue, also set a new single-quarter record, exceeding analyst expectations by over 3%.
Nvidia's profitability in Q4 was equally strong. On a non-GAAP basis, adjusted earnings per share (EPS) grew over 80% year-over-year, about 5.9% higher than analyst expectations. The gross margin also climbed beyond expectations to 75.2%, a new high in the past year and a half.
Even more encouraging for investors was that Nvidia's guidance for the first quarter of fiscal year 2027 (Q1) was also stronger than expected. Revenue is expected to reach another new high, with the midpoint of the guidance range being 7.1% higher than the analyst consensus expectation midpoint, and even 4% higher than the buyers' optimistic expectations. The year-over-year growth rate accelerated to nearly 77% compared to Q4. Nvidia pointed out that this guidance excludes data center compute revenue from the China market.
During the earnings call on Wednesday, Nvidia CEO Jensen Huang also raised the chip revenue forecast made previously, stating, "We will surpass the $500 billion target." Supply will meet demand through next year. At the GTC conference last October, Huang revealed that Nvidia had secured a total of $500 billion worth of chip orders for calendar years 2025 and 2026, including the next-generation Rubin chips set to begin mass production this year.
Huang stated that customers are racing to invest in AI computing. Computing demand is growing rapidly. Enterprise adoption of agents is soaring. Speaking about the "space data center," he said the current space data center economy is still "impoverished," but the situation will change over time.
After the earnings release, Nvidia's stock price, which had already risen over 1% on Wednesday, extended its gains after hours, with the increase quickly expanding to once exceed 4%. Analysts believe the key to the market's buying lies in: Data center revenue and total revenue both exceeding expectations; The gross margin continues to improve with the production ramp of the new Blackwell architecture chips, and the guidance for this quarter is even stronger without including part of the China market revenue, reinforcing the narrative of resilient AI computing demand.
However, during the conference call, Nvidia's stock price continued to give back gains, turning negative after hours, once falling over 1%. Some commentary stated that the stock price decline shows investors were not impressed by the latest guidance,暗示ing that market concerns about an overheated AI economy will continue to trouble Nvidia. Other analysis pointed out that operating expenses continue to grow at a high rate, and stock-based compensation (SBC) will be included in non-GAAP metrics starting from Q1, which may short-term change investors' perception of "profit acceleration."
Q4 Revenue Hits Single-Quarter Record High, Gross Margin Reaches New High in a Year and a Half
Nvidia's Q4 revenue grew 73% year-over-year to $68.127 billion, with growth rate significantly higher than the previous quarter's 62%, exceeding Nvidia's own guidance midpoint of $65 billion. Analyst expected revenue was $65.91 billion,约68% year-over-year growth. Nvidia's full-year revenue also reached an annual record of $215.938 billion, a 65% increase compared to the previous year.
Gross margin was another highlight in Q4: The non-GAAP gross margin was 75.2%, up 1.7 percentage points year-over-year and 1.6 percentage points quarter-over-quarter, setting a new single-quarter high since Q2 of fiscal year 2025, higher than the analyst consensus expectation of 74.7% and the optimistic expectation of 75.0%.
Nvidia's Chief Financial Officer (CFO) Colette Kress explained that the year-over-year improvement in gross margin came from "reduced inventory charges," while the sequential improvement was related to the "better product mix and cost structure" brought by the continued volume production of Blackwell chips.
However, for the entire fiscal year 2026, the non-GAAP gross margin declined, dropping from 75.5% in the previous fiscal year to 71.3%, a decrease of 4.2 percentage points year-over-year, showing that during the platform transition and supply ramp phase, the full-year profit margin will still be affected by structural disruptions.
Data Center: Compute Growth Steady, Networking Accelerates
Nvidia's data center business recorded revenue of $62.314 billion in Q4, a 75% year-over-year increase, with acceleration higher than the previous quarter's 66%. Analysts expected约70% year-over-year growth to $60.36 billion.
Within the data center, Nvidia provided two sets of numbers worth noting:
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Data Center Compute revenue was $51.334 billion, a 58% year-over-year increase, with acceleration higher than Q3's 56%.
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Data Center Networking revenue was $10.980 billion, a 263% year-over-year increase, with acceleration far exceeding Q3's 162%.
Nvidia attributed the explosion in networking revenue to: The "launch and continued ramp" of NVLink compute fabric for GB200 and GB300 systems, alongside continued growth in Ethernet and InfiniBand platforms.
In other words, the market should not only focus on the shipment节奏 of GPUs themselves, but also see that Nvidia is packaging "compute, interconnect, systems" into a more irreplaceable overall solution. The high growth rate of networking revenue is precisely the financial reflection of this strategy.
Regarding customer structure, the company disclosed: In Q4, revenue from hyperscalers accounted for略超50% of total data center business revenue, still the largest customer category, but revenue growth in the quarter came more from other data center customers, showing that revenue sources are diversifying, marginally alleviating concentration risk.
Blackwell Drives Gaming Demand, Short-Term Impacted by Supply and Channel Disruptions
Nvidia's gaming business revenue in Q4 was $3.727 billion, a 47% year-over-year increase. Analyst expectations were $4.01 billion. The previous quarter saw 30% year-over-year growth.
The gaming business's year-over-year growth accelerated in Q4. Nvidia explained this was primarily driven by strong demand for Blackwell chips. However, this business's revenue decreased 13% sequentially, due to "natural channel inventory drawdown after the holiday season." Notably, Nvidia explicitly提示: Starting in Q1 and beyond, supply constraints are expected to become a headwind for the gaming business.
Q4 professional visualization revenue was $1.321 billion, a 159% year-over-year increase. Analyst expectations were $770.7 million. The previous quarter saw 56% year-over-year growth.
Professional visualization also achieved more than double year-over-year revenue growth and 74% sequential growth under Blackwell's impetus, becoming one of the brightest incremental businesses besides data centers. However, the scale of this business is far smaller than data centers.
Q1 Revenue Guidance Midpoint Implies ~77% YoY Growth, Excluding China Data Center Compute Revenue
Regarding performance guidance, Nvidia announced that Q1 revenue is expected to be $78.8 billion, plus or minus 2%, i.e., $76.44 billion to $79.56 billion. This range implies that Nvidia's revenue this quarter will刷新the record high set in Q4.
Calculated based on the revenue guidance midpoint, this implies Nvidia expects Q1 revenue to grow 76.9% year-over-year, further accelerating from Q4's 73% growth rate.
Nvidia's revenue guidance midpoint not only exceeded the analyst consensus expectation midpoint of $72.78 billion but also surpassed the buyers' optimistic expectation of $74 billion to $75 billion.
Nvidia's Q1 gross margin is in line with Wall Street buyers' optimistic expectations and is expected to set a new high since Q2 of fiscal year 2025.
The non-GAAP adjusted gross margin for Q1 is expected to be 75%, plus or minus 50 basis points, i.e., 74.5% to 75.5%. The buyers' optimistic expectation was 75%, and the sell-side consensus expectation was 74.7%.
Non-GAAP to Include Stock-Based Compensation Starting Q1
Simultaneously with the earnings release, Nvidia announced that starting from Q1, financial metrics on a non-GAAP basis will no longer exclude stock-based compensation (SBC). Due to this adjustment, Nvidia预计that non-GAAP operating expenses in Q1 will be impacted by approximately $1.9 billion.
This change will directly alter the "customary口径" long used by the market for横向comparing profit margins and expense ratios. It may necessitate recalibration of consensus models in the short term and will also allow investors to see more clearly the real costs Nvidia incurs to maintain talent and R&D leadership.
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