Nvidia: Don't question it, still the number one stock in the universe!

NVIDIA (NVDA.O) released its Q1 FY2026 earnings report (as of April 2025) after the U.S. market closed on May 29 Beijing time. Key details are as follows:

1. Core Operating Metrics: Revenue of $44.06 billion, in line with expectations ($43.37 billion), with a quarterly increase of $4.7 billion driven by data center and gaming segments. Gross margin was 60.5%, below expectations (68.9%), primarily due to a $4.5 billion inventory write-down related to H20 chips. Excluding this one-time event, the gross margin would have rebounded to around 71%.

2. Data Center: $39.11 billion, up 72% YoY. The H20 incident only affected revenue in the last two weeks of the quarter, with minimal overall impact. The revenue impact will be more pronounced in the next two quarters.

Breakdown: Compute revenue was $39.6 billion, while networking revenue was $4.5 billion. Quarterly growth in compute revenue slowed as some downstream clients adjusted capital expenditure timelines in anticipation of the upcoming mass production of GB300 products.

3. Gaming: $3.76 billion, up 42% YoY, the standout segment this quarter. Driven by the launch of the RTX50 series by $NVIDIA(NVDA.US), NVIDIA further expanded its market share in discrete GPUs amid AMD's declining gaming revenue.

4. Profit: Core operating profit was $21.6 billion, up 28% YoY. Core operating margin fell to 49.1%, mainly due to the $4.5 billion H20 inventory write-down.

5. Guidance: Next quarter revenue is projected at $45 billion, up $1 billion QoQ; GAAP gross margin is expected at 71.8%, up 11.3 ppts. The rebound to ~72% gross margin indicates the company has largely completed H20-related write-downs this quarter.

Dolphin Research's View: Solid overall, with more confident guidance.

Revenue met expectations, while the gross margin plunge was mainly due to the $4.5 billion H20-related write-down. Excluding this, gross margin would have been ~71%.

Gaming was the standout, up 42% YoY, fueled by RTX50 series shipments. For the data center segment, the H20 impact will be more visible in Q2-Q3, with minimal effect this quarter (~1-2 weeks). Slower QoQ compute growth ($5B → $3.5B) reflects both $2.5B revenue loss from H20 export restrictions and clients delaying purchases for GB300.

Guidance is more telling: NVIDIA expects $45B next-quarter revenue, implying just $1B QoQ growth but already factoring in ~$8B H20 impact. Without H20, growth could have been $9B QoQ—a strong signal of Blackwell demand, surpassing NVIDIA's prior record of $5B quarterly growth.

Short-term, U.S. H20 bans will weigh on earnings, but customized China products may offset losses. With write-downs mostly done, margins are set to recover. The $1B growth amid $8B H20 headwinds underscores robust Blackwell demand.

Based on cloud capex trends, Dolphin Research expects 2025 capex for top 4 cloud providers to hit $346B (+38% YoY). Valuing NVIDIA at 26x PE (based on H2 FY2026 net profit ×2, assuming +55% revenue and -0.5ppt gross margin YoY) implies a $3.3T market cap.

As Blackwell ramps, H20's impact will fade. Future China-specific products could further mitigate losses. Guidance reflects strong Blackwell demand, with NVIDIA gaining share in data center chips amid rising cloud capex.

For analysis on H20's disruption and Blackwell's implied growth, see Longbridge's quick take: Click here.

Dolphin Research's full NVIDIA analysis:

I. Business Overview

Data center now dominates (~90% of revenue), while gaming (~10%) has shrunk.

Segments:

1) Data Center: H100, A100, Blackwell for AI/ML; clients include AWS, Azure, Google Cloud.

2) Gaming: RTX40/50 series for gamers/PC OEMs.

3) Pro Viz/Auto: ~1-2% each; clients include Pixar (viz) and BYD/Xiaomi/Li Auto (Orin/Thor chips).

II. Key Metrics: H20 Write-Down Largely Resolved

2.1 Revenue: $44.06B (+69.2% YoY). Gaming outperformed; data center met expectations as clients awaited GB300.

Guidance of $45B next quarter factors in ~$8B H20 impact. Excluding this, growth would be $9B QoQ—driven by Blackwell/RTX50.

2.2 Gross Margin (GAAP): 60.5% (vs. 68.9% expected). The $4.5B H20 write-down caused the drop. Adjusted gross margin would be ~71%, with the QoQ decline (73%→71%) reflecting Blackwell ramp costs.

Next-quarter guidance of 71.8% GAAP gross margin suggests H20 charges are mostly behind. Further recovery expected as Blackwell scales.

2.3 Operating Metrics

1) Inventory/Revenue: 0.26, flat QoQ. Inventory rose to $11.3B (Blackwell prep), but high growth keeps ratios low.

2) Receivables/Revenue: 0.5, down again. High revenue growth diluted receivables.

III. Segment Trends: Gaining Share

Data center (Compute + Networking) is ~90% of revenue; gaming below 10%.

3.1 Data Center: $39.11B (+73.3% YoY). Blackwell drove growth for LLM/recommendation/genAI training/inference.

Breakdown: Compute revenue $34.1B (+76.1% YoY); Networking $4.96B (+56.3% YoY).

QoQ compute slowed to $1.6B growth (vs. $5B prior) as clients paused for GB300; networking accelerated to $1.93B.

H20's $4.5B write-down and ~$8B next-quarter revenue impact are short-term headwinds. The $45B guidance (implying $9B ex-H20 growth) signals strong Blackwell demand—surpassing NVIDIA's $5B prior record.

Top 4 cloud providers' Q1 2025 capex hit $78.3B (+64.4% YoY). With data center growing 73.3% YoY, NVIDIA is gaining share. Dolphin Research expects 2025 cloud capex to reach $346B (+38% YoY), supporting future growth.