In response to growing investor skepticism, NVIDIA emphasized in its latest quarterly report that it is advancing its business diversification strategy, aiming to reduce reliance on the large data center operators that have fueled its explosive performance. While spending from these large data center clients—often referred to as hyperscale cloud service providers—continues to surge, NVIDIA anticipates that a wide array of other enterprises and government agencies will soon become more significant revenue contributors. These customers are expected to procure NVIDIA's chips and other computing products to support their respective artificial intelligence (AI) strategies.
CEO Jensen Huang stated during an analyst call that, in the long term, so-called "physical AI" will present a substantial new opportunity through robotics and autonomous vehicles, adding, "We have comprehensively covered this field." However, investors are becoming increasingly difficult to impress. Despite NVIDIA reporting earnings and guidance that exceeded analyst expectations, its stock fell approximately 1% in after-hours trading on Wednesday. Even measures to enhance shareholder returns—including a significant dividend increase from $0.01 to $0.25 per share and an announcement of an $80 billion stock repurchase plan—failed to alleviate investor concerns.
For the first fiscal quarter ending April 26, 2026, NVIDIA reported revenue of $81.62 billion, an 85% year-over-year increase, significantly surpassing the analyst consensus range of $78.75 billion to $79.2 billion. Adjusted earnings per share were $1.87, also exceeding market estimates of $1.75 to $1.77. Quarterly net profit reached $58.3 billion, up 211% year-over-year, nearly triple the figure from the same period last year.
The data center segment remained the core growth engine. Data center revenue for the quarter was $75.2 billion, a 21% sequential increase and nearly double the $39.1 billion from the prior year, far exceeding analyst expectations of $72.8 billion. Edge computing revenue was $6.4 billion, up 10% year-over-year.
NVIDIA reformed its financial reporting structure this quarter, splitting the data center business into two sub-segments: "Hyperscale" and "ACIE" (AI Cloud, Industrial, and Enterprise), to better reflect current and future growth drivers. The "Hyperscale" category includes revenue from public clouds and the world's largest consumer internet companies, while the "ACIE" segment highlights NVIDIA's growth opportunities across various industries and countries in dedicated AI data centers and AI factories. The edge computing segment focuses on data processing devices for agents and physical AI, including PCs, gaming consoles, workstations, AI-RAN base stations, robots, and vehicles.
Looking ahead to the second fiscal quarter, NVIDIA expects revenue to be approximately $91.0 billion, plus or minus 2%. This figure is above the analyst consensus estimate of $86.88 billion and exceeds some media reports of a midpoint guidance around $87.0 billion. However, the issue lies with the expected "ceiling." According to aggregated data, while the average analyst forecast is $87.0 billion, buy-side institutions have privately circulated expectations that have quietly risen to $96.0 billion. The $91.0 billion guidance, while statistically a "beat," falls short of meeting the heightened expectations of some investors.
Concurrently, NVIDIA is facing the first significant challenges to its dominance in AI computing, including efforts by multiple chip manufacturers to capture a share of this market. AMD has introduced competing products, and Broadcom and Google are entering the market with their own proprietary technologies.
Nevertheless, NVIDIA remains in an enviable position. Wall Street expects NVIDIA's revenue this year to account for over one-third of the entire semiconductor industry's sales. Huang stated in a release, "The construction of AI factories—the largest infrastructure expansion in human history—is accelerating at an unprecedented pace."
Spending on data centers, NVIDIA's primary revenue source, shows no signs of slowing. Hyperscale cloud service providers plan to invest approximately $725 billion in AI this year. According to NVIDIA's latest financial report, revenue growth from these companies continues to outpace other sources. This trend not only drives sales of AI accelerators but also boosts demand for general-purpose CPUs (central processing units), benefiting Intel and AMD. Emerging chip companies are also receiving a boost—Cerebras Systems, which employs innovative designs with large silicon wafers, completed the largest IPO of the year last week.
NVIDIA continues to expand into new business areas. The company has begun selling general-purpose processors and introduced chips specifically designed for the AI inference phase. It expects its CPU business revenue to reach $20 billion this year, which would position it as the world's largest CPU supplier. Additionally, NVIDIA offers networking equipment, software, AI models, and even complete computer systems. Management believes this makes the company formidable in terms of coverage and capabilities. NVIDIA stated that current order volume exceeds its production capacity and that it is investing to expand supply capabilities to meet demand.
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