Nvidia (NASDAQ: NVDA) is set to report its Q1 2026 earnings on Wednesday after the market closes. Analysts expect the company to report strong results following a solid stock performance this year. Nvidia has outperformed its competitors, leading the Magnificent Seven stocks.
With Wall Street expecting Nvidia to report record-breaking results, the chipmaking giant’s trajectory depends on its AI innovation, global partnerships, and managing US export restrictions to China.
Earnings Outlook and Estimates
- Earnings Per Share (EPS): $0.88 per share, 44% increase from the $0.61 reported last year.
- Revenue: $43.83 billion, 68% increase from the $26 billion reported a year earlier.
Nvidia has consistently surpassed analysts’ estimates on earnings and revenues for 8 quarters straight as the company became a leader in the semiconductor industry.
Nvidia’s stock has fluctuated wildly since the start of the year, dealing with setbacks ranging from the Trump administration tariff announcement to restricting shipments of its H20 chips exports to China. ⁽¹⁾
Nvidia is up 26.5% YTD and almost 22% in May alone due to highlights such as strategic partnerships with the Gulf nations and major tech companies, innovation in AI, and advanced chip making.
Data Center, Gaming Segments, and China Sales Forecasts
The data center segment, which remains Nvidia’s largest segment, is expected to report $39.2 billion in revenue, a 74% increase YoY. The gaming segment is expected to report $2.8 billion in revenue. Despite a $5.5 billion charge due to US restrictions on Nvidia’s H20 chip sales to China, analysts remain optimistic as China accounts for just 5% of Nvidia’s sales. ⁽²⁾
Analysts anticipate Nvidia’s China revenue to come in at $6.2 billion, up 150% from the $2.4 billion it sold in the region in Q1 last year. The US is expected to account for $21.6 billion of the company’s sales. ⁽³⁾
Export Restrictions and New Alternative
The US has put a restriction in motion on chip exports to China, mainly targeting Nvidia’s H20 chip. CEO Jensen Huang has criticized these policies as a “failure” and could boost China’s domestic AI chip manufacturing.
Nvidia will launch a new artificial intelligence chipset for China at a significantly lower price than its recently restricted H20 model and plans to start mass production as early as June, sources familiar with the matter said. ⁽⁴⁾
The GPU or graphics processing unit will be part of Nvidia’s latest generation Blackwell-architecture AI processors and is expected to be priced between $6,500 and $8,000, well below the $10,000-$12,000 the H20 sold for. The lower price reflects its weaker specifications and simpler manufacturing requirements. ⁽⁵⁾
AI Boom
The AI revolution is driving high demand for Nvidia’s graphics processing units (GPUs), particularly as hyperscalers like Meta, Alphabet, Amazon, and Microsoft ramp up their AI infrastructure. Combined spending from these tech giants is projected to exceed $300 billion in 2025, with total US corporate AI investment surpassing $500 billion. ⁽⁶⁾
Nvidia, as the leading supplier of AI chips, is reaping the benefits. Its capital expenditures have surged over 200% this year to more than $3 billion, with CEO Jensen Huang forecasting a 300% increase in AI-related investments over the next three years, driven by the production of the high-performance Blackwell GPU. ⁽⁷⁾
Strategic Partnerships and Global Expansion
Nvidia holds a large stake in CoreWeave, an AI infrastructure provider, with 24.18 million shares reported in its latest 13F filing. ⁽⁸⁾
Internationally, Nvidia has secured multi-billion-dollar deals, notably as the chip supplier for Saudi Arabia’s AI venture, Humain, which will receive hundreds of thousands of GPUs over the next five years. This deal, alongside another for Project Stargate in the UAE using Blackwell systems, shows Nvidia’s global ambitions despite challenges like US export controls impacting its China market. ⁽⁹⁾
Key Factors To Watch
- AI Chip Demand: The performance of Nvidia’s AI chips, particularly the H200 and GB200, will be a focal point, given their significant contribution to revenue growth.
- Blackwell Production: Nvidia is expected to take a hit to its profitability this quarter due to ramping up production and reducing profit margins to improve Blackwell production. Investors will closely monitor Nvidia’s guidance.
- Export Controls: The impact of US export restrictions on Nvidia’s sales, especially in China, remains a concern, with a reported $5.5 billion charge this quarter.
- Competitive Pressure: Nvidia remains dominant, but AMD has been making significant moves with its own advanced AI chips, and major cloud companies like Google and Amazon are building custom AI hardware to reduce their dependence on Nvidia.
- Future Guidance: Comments from management, such as broader market trends, including recent tariff announcements and their effects on tech stocks will be monitored by traders and investors.
Bottom Line
Nvidia’s Q1 earnings report is poised to be a defining moment for the chipmaker and the broader AI sector. With robust revenue growth expected and significant investments in AI infrastructure, Nvidia remains a linchpin of the tech industry’s AI ambitions.
However, challenges like export restrictions and uncertainty around Blackwell’s performance could shape its trajectory. As analysts and investors await Wednesday’s results, Nvidia’s ability to sustain its rally and capitalize on the AI boom will be closely monitored by investors and traders.
