NVIDIA Posts Strong Earnings, But Investors Balk

NVIDIA (Nasdaq: NVDA) reported another record quarter last night, and though investor response was negative, it’s clear the company will firmly retain its leadership in AI infrastructure for the foreseeable future. Though some customers may wish for alternatives, NVIDIA's still the top game in town.

For the company’s first fiscal quarter of 2027, which ended April 26, NVDIA reported total revenue of $82 billion, up 85% year-over-year (y/y) and 20% sequentially. Diluted net income was $45.5 billion, and diluted EPS came in at $1.87 per share. Most measures beat Wall Street expectations.

Digging into the results, a few items stood out: Data Center Compute revenue was $60.4 billion, up 77% from a year ago and up 18% sequentially. Data Center Networking revenue was a record $14.8 billion, up 199% from a year ago and up 35% sequentially. According to CFO Colette Kress, growth in both segments was driven by sales of Blackwell products and demand for NVIDIA’s InfiniBand, Spectrum-X, and NVLink networking solutions.

New Accounting Categories

But NVIDIA is restructuring their financial reporting segments to account for what CEO Jensen Huang termed growing diversity in NVIDIA’s customer base. Instead of Data Center Compute and Networking revenue, NVIDIA now reports two main segments, Data Center and Edge Computing.

Within Data Center there are two further subsegments: Hyperscale; and AI Clouds, Industrial, & Enterprise—ACIE, which includes AI factories, neoclouds, sovereign AI, and enterprise customers. Edge Computing, according to CFO Colette Kress, “highlights devices for agentic and physical AI including PCs, game consoles, workstations, AI-RAN base stations, robotics and automotive.”

Within the new categorization, Data Center revenue came in at $75.2 billion, up 92% y/y and 21% sequentially. Hyperscale revenue accounted for about 50% of that figure, while ACIE sales took the remainder.

Interestingly, while Hyperscale remains the fastest growing segment now, ACIE will potentially outstrip that segment in growth. “Both are gonna grow incredibly fast, [but] I expect the second category to still grow faster,” said CEO Huang on last night’s call.

Future Predictions

Another notable item in last night’s report was a robust forecast for sales of NVIDIA’s Vera CPU, conforming to a marketwide trend. In her remarks, CFO Kress stated:

“Agentic AI and reinforcement learning represents new growth opportunities for CPUs. Building on the success of our Grace CPU, Vera is arriving just in time to meet this inflection…. VeraCPU opens a brand new $200 billion TAM for NVIDIA, a market we have never addressed before. And every major hyperscale and system maker is partnering with us to get it deployed. We have visibility to nearly $20 billion in total CPU revenue this year.”

Overall, NVIDIA is guiding to $91 billion plus or minus 2% for next quarter. Gross margins should stay flat at a solid 75%.

Investor Response

So what’s not to love about NVIDIA’s latest stellar quarter? Speculation includes disappointment in NVIDIA’s guidance, which some Wall St. analysts reportedly hoped would soar to $96 billion for this quarter. Management’s representation of the company’s $20 billion investment in chipmaker Groq was also muted: Huang said the use case for the Groq LPX chip is “not broad” and that the “number of customers is not significant.”

Still, NVIDIA’s full-stack approach to AI continues to resonate with others on Wall Street, despite many customers' hopes for relief from vendor lock-in: “We continue to see Nvidia as the primary beneficiary of the ongoing AI platform shift and reiterate our Outperform rating,” stated William Blair’s Sebastien Naji in a note to investors. “We continue to see a favorable risk/reward equation for shares, with Nvidia positioned to be a major beneficiary of increased AI capital investments over the coming years.”

Some investors seem concerned about competing chips, such as those from Cerebras, but Blayne Curtis of Jefferies stated in his note: “We remain cautious on whether investors will return to the name given concerns around merchant XPUs and compute diversification more broadly but in the interim NVDA continues to look remarkably cheap and the upside EPS case continues to widen.”

Futuriom Take: Investors are now used to stellar quarterly reports from NVIDIA, though some want even more. This, and concerns about competition, led to unenthusiastic investor response. Still, NVIDIA’s full-stack approach ensures it a firm place in the market for the foreseeable future.