NVIDIA’s Q4 Revenue Up 73%; Q1 Guidance “Explosive” and a New Record—Jensen Huang Raises Revenue Target to $50 Billion
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NVIDIA’s Q4 Revenue Up 73%; Q1 Guidance “Explosive” and a New Record—Jensen Huang Raises Revenue Target to $50 Billion
Huang Renxun stated that with the explosive growth in computing demand and a surge in agent-based applications, the current space-based data center economy remains “underdeveloped.”
Navigating Web3 tides with focused insightsAuthor: Li Dan
Amid a recent wave of product launches by Anthropic and Citrini’s “doomsday report” intensifying investor anxiety, the AI boom has withstood direct scrutiny—NVIDIA delivered blockbuster earnings, proving that demand generated by AI remains robust.
On Wednesday, February 25 (U.S. Eastern Time), NVIDIA reported record revenue of $68.1 billion for its fiscal fourth quarter ended January 31, 2026 (“Q4”), representing a ~70% year-on-year increase. Its core data center business—which contributed over 90% of total revenue—also achieved a new quarterly revenue high, both exceeding analyst expectations by more than 3%.
NVIDIA’s Q4 profitability was equally strong. On a non-GAAP basis, adjusted earnings per share (EPS) surged over 80% year-on-year—approximately 5.9% above analyst expectations—while gross margin climbed to 75.2%, surpassing expectations and reaching a one-and-a-half-year high.
Even more encouraging for investors was NVIDIA’s guidance for its first fiscal quarter of FY2027 (“Q1”), which also exceeded expectations. Revenue is projected to hit another record high, with the midpoint of its guidance range 7.1% above the consensus analyst estimate—and even 4% higher than the most optimistic buy-side forecasts. Year-on-year growth is expected to accelerate to nearly 77%, up from Q4’s pace. NVIDIA noted this guidance excludes data center compute revenue from China.
During Wednesday’s earnings call, NVIDIA CEO Jensen Huang raised his prior chip revenue target, stating, “We will surpass the $500 billion goal.” He added, “Supply will meet demand through next year.” At last October’s GTC conference, Huang revealed that NVIDIA had already secured $500 billion in chip orders for the calendar years 2025 and 2026—including the next-generation Rubin chips, scheduled to enter mass production this year.
Huang said customers are racing to invest in AI computing, demand for computing power is surging, and enterprise adoption of AI agents is skyrocketing. Regarding “space data centers,” he noted that the current economics remain “barren,” but the situation will evolve over time.
Following the earnings release, NVIDIA’s stock—already up over 1% on Wednesday—rose further after hours, briefly climbing over 4%. Analysts attributed the market’s positive reaction primarily to two factors: (1) data center revenue and total revenue both exceeding expectations; and (2) gross margin continuing to improve as production ramps up for the next-generation Blackwell architecture chips—and notably, the stronger-than-expected guidance for the current fiscal quarter excludes part of the Chinese market’s data center revenue, reinforcing the narrative of resilient AI compute demand.
However, during the earnings call, NVIDIA’s stock gradually gave back those gains, turning negative in after-hours trading and at one point falling over 1%. Some commentators suggested the reversal signaled investor skepticism toward the latest guidance, reflecting ongoing concerns about overheating in the AI economy. Others pointed out that operating expenses continue growing rapidly, and beginning in Q1, stock-based compensation (SBC) will be included in non-GAAP metrics—a short-term shift that may alter investor perceptions of “profit growth.”
Q4 Revenue Hits Record High; Gross Margin Reaches One-and-a-Half-Year Peak
NVIDIA’s Q4 revenue rose 73% year-on-year to $68.127 billion—significantly higher than the prior quarter’s 62% growth—and surpassed NVIDIA’s own mid-point guidance of $65 billion. Analysts had expected $65.91 billion in revenue, representing ~68% year-on-year growth. For the full fiscal year, NVIDIA’s revenue also reached an annual record of $215.938 billion, up 65% year-on-year.
Gross margin emerged as another highlight for Q4: On a non-GAAP basis, it stood at 75.2%, up 1.7 percentage points year-on-year and 1.6 percentage points sequentially—its highest level since Q2 of FY2025—and above both the consensus analyst expectation of 74.7% and the more optimistic forecast of 75.0%.
NVIDIA CFO Colette Kress explained that the year-on-year improvement stemmed from “reduced inventory provisions,” while the sequential gain reflected “a better product mix and cost structure” driven by continued ramp-up of Blackwell chips.
Yet for the full FY2026, non-GAAP gross margin declined—from 75.5% in the prior fiscal year to 71.3%, down 4.2 percentage points year-on-year—indicating that structural pressures on full-year profitability persist amid platform transitions and supply ramp-ups.
Data Center: Compute Growth Stabilizes; Networking Accelerates
NVIDIA’s data center business posted Q4 revenue of $62.314 billion, up 75% year-on-year—faster than the prior quarter’s 66% growth—and well above analysts’ expectation of ~70% growth to $60.36 billion.
Within the data center segment, two figures deserve particular attention:
- Data center compute revenue totaled $51.334 billion, up 58% year-on-year—slightly faster than Q3’s 56% growth.
- Data center networking revenue reached $10.98 billion, up 263% year-on-year—far outpacing Q3’s 162% growth.
NVIDIA attributed the explosive growth in networking revenue to the launch and continued ramp-up of NVLink compute fabric for GB200 and GB300 systems, alongside ongoing growth across Ethernet and InfiniBand platforms.
In other words, investors should look beyond GPU unit shipments alone and recognize that NVIDIA is bundling “compute, interconnect, and system” into harder-to-replace integrated solutions—the high growth in networking revenue reflects the financial impact of this strategy.
Regarding customer composition, the company disclosed that revenue from hyperscalers accounted for just over 50% of total data center revenue in Q4—still the largest customer category—but growth came predominantly from other data center customers, signaling broadening revenue sources and marginal easing of concentration risk.
Blackwell Fuels Gaming Demand; Short-Term Supply and Channel Headwinds Emerge
NVIDIA’s gaming business generated $3.727 billion in Q4 revenue, up 47% year-on-year—below the $4.01 billion analysts expected, but faster than Q3’s 30% growth.
The acceleration in gaming revenue growth was driven primarily by strong demand for Blackwell chips, NVIDIA explained. However, revenue declined 13% sequentially due to “natural channel inventory drawdown following the holiday season.” Notably, NVIDIA explicitly warned that supply constraints are expected to become a headwind for the gaming business starting in Q1 and beyond.
Professional visualization revenue totaled $1.321 billion in Q4, up 159% year-on-year—well above the $770.7 million analysts expected and significantly faster than Q3’s 56% growth.
Also propelled by Blackwell, professional visualization revenue more than doubled year-on-year and rose 74% sequentially—making it one of the brightest incremental performers outside the data center business. Still, its scale remains far smaller than that of the data center segment.
Q1 Revenue Guidance Midpoint Up Nearly 77% Year-on-Year; Excludes China Data Center Compute Revenue
For guidance, NVIDIA projected Q1 revenue of $78 billion, plus or minus 2%—i.e., between $76.44 billion and $79.56 billion. This implies NVIDIA expects to set yet another quarterly revenue record, surpassing Q4’s high.
Using the midpoint of the guidance range, NVIDIA anticipates Q1 revenue growth of 76.9% year-on-year—further accelerating from Q4’s 73% growth rate.
NVIDIA’s Q1 revenue guidance midpoint not only exceeds the consensus analyst estimate of $72.78 billion but also tops the most optimistic buy-side forecasts of $74–75 billion.
NVIDIA’s Q1 gross margin guidance aligns with the most optimistic buy-side forecast, indicating it will reach another high since Q2 of FY2025.
On a non-GAAP basis, adjusted gross margin for Q1 is expected to be 75%, plus or minus 50 basis points—i.e., between 74.5% and 75.5%. The most optimistic buy-side forecast stands at 75%, while the sell-side consensus is 74.7%.
Stock-Based Compensation (SBC) Included in Non-GAAP Metrics Starting Q1
Alongside its earnings release, NVIDIA announced that, beginning in Q1, stock-based compensation (SBC) will no longer be excluded from non-GAAP financial metrics. As a result of this change, NVIDIA estimates SBC will impact Q1 non-GAAP operating expenses by approximately $1.9 billion.
This shift directly alters the long-standing benchmark used by the market to compare margins and expense ratios across companies. It may trigger short-term recalibration of consensus forecasting models—and will give investors clearer visibility into the real costs NVIDIA incurs to retain talent and maintain R&D leadership.
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