NVIDIA [NVDA], the AI infrastructure giant's "strength" and "shadow" - Analyzing the Q1 2026 financial results | Hiyachiro Okamoto's Path to Mastering U.S. Stocks | Moneyクリ Monex Securities' investment information and media useful for money.

Sales of 44.1 Billion Dollar ─ The Growth Achieved by the Main Players of the AI Era

In the first quarter of fiscal year 2026 (ending April 27, 2025), NVIDIA [NVDA] reported an astounding revenue of $44.1 billion. This represents an impressive year-on-year increase of +69% and a quarter-on-quarter growth of +12%, further solidifying its position as a core company in AI infrastructure. Following this announcement, NVIDIA's stock price has risen by more than 4% in the market after the earnings report.

Despite the good financial results, the revenue of the core data center division reached 39 billion Dollar, a remarkable increase of +73% compared to the same period last year. The demand for inference and training driven by generative AI continues to expand, successfully capturing a new wave of infrastructure demand known as "AI Factory."

CEO Jensun Hwan stated, "The token generation amount in AI inference has increased tenfold over the past year. In the future, AI agents will become mainstream, and the demand for AI computing will surge even further," showing strong confidence.

Direct Hit from US-China Friction - 4.5 Billion Dollar Loss from H20 Chip Inventory

However, behind this strong financial performance, there are clear headwinds caused by the US-China conflict. On April 9, 2025, the US government introduced regulations requiring new export licenses for NVIDIA's products destined for China, specifically the "H20". As a result, NVIDIA recorded a temporary loss of $4.5 billion related to H20 inventory and procurement contracts in the first quarter.

H20 was originally marketed to the Chinese market as a "legal product" in compliance with existing regulations. In the first quarter, H20 generated sales of $4.6 billion, but due to the impact of new regulations, shipments worth $2.5 billion were halted, and NVIDIA estimates that there could be an additional $8 billion in lost sales opportunities in the future.

As a result of this impact, the gross profit margin has significantly decreased to 61.0% on a non-GAAP basis. Even after adjusting for the H20 loss, it stands at 71.3%, showing a clear slowdown compared to 73.5% in the previous quarter and 78.9% in the same period last year.

The New Hope Brought by the "Blackwell" Architecture

Still, NVIDIA has a clear weapon for future growth. That is the next-generation architecture "Blackwell" and the deployment of the AI supercomputer "NVL72" equipped with it.

"NVL72" has already entered full-scale mass production, utilizing not only the manufacturing base within the United States but also advancing the construction of "AI factories" in geopolitically diverse regions such as Saudi Arabia, the United Arab Emirates (UAE), and Taiwan. This is establishing a global system that can flexibly respond to the demand for AI infrastructure while avoiding risks associated with China.

The CEO of Fan stated, "Governments around the world are beginning to recognize AI as the 'critical infrastructure' following electricity and the internet, and Nvidia is at the core of that."

Cloud, Gaming, Autonomous Driving ─ Diversifying Revenue Structure through Multi-faceted Development

Nvidia is making steady progress not only in generative AI but also in other business areas.

The gaming division recorded a historic growth with a revenue of 3.8 billion Dollar (up 48% from the previous quarter, up 42% year-on-year). In addition to the launch of new products such as "RTX 5070" and "DLSS 4", the incorporation of NVIDIA chips into Nintendo's next-generation gaming console "Switch 2" is generating buzz.

In the professional visualization sector, there has been growth of +19% in sales, and the automotive division shows +72% growth, with ongoing collaboration on next-generation vehicles and robotics development with General Motors [GM]. Leadership is also being strengthened in the humanoid AI field, including the "Isaac GR00T" series.

Outlook and Comments from CFO Kress - The Recovery Scenario is Already in Motion

For the second quarter guidance of fiscal 2026, Nvidia has projected revenue of $45 billion (±2%) and a gross margin of around 72.0%. They are attempting to offset the $8 billion loss in sales due to H20 by building AI infrastructure with new products and in new regions to maintain growth.

NVIDIA's Chief Financial Officer (CFO) Colette Kress emphasized that "the losses related to H20 are temporary, and overall AI demand and customer base are rather robust."

In particular, generative AI vendors such as Meta Platforms [META], OpenAI, and xAI are successively adopting AI platforms based on "Blackwell," and a "second wave" of revenue structure in the form of AI agents and SaaS-type AI services is beginning to emerge.

Growth Companies That Shine Even Amid Regulatory Risks

This financial report showed that despite being faced with geopolitical headwinds, NVIDIA pushed back with its product strength, partner strategy, and geographic diversification strategy.

The H20 issue is certainly not a trivial problem, but measures have already been taken to overcome it, and it can be said that the earnings report was one that "showed Nvidia's true value in the midst of trials" for the stock market.

As the wave of generative AI → AI agents → AI factories progresses, it is believed that the role of NVIDIA will become even more significant. Data centers, cloud, edge, gaming, cars, robots—NVIDIA is likely to further enhance its presence as the "electric company of AI" that connects all of these.