By Blake Anderson, CFA®, Associate Portfolio Manager
The Numbers
Nvidia’s latest quarterly results exceeded both the company’s and investors’ expectations. The company posted quarterly revenue of $68.1 billion, which exceeded the $65.0 billion of revenue the company guided for. This $3.1 billion beat compared to their guidance marks the company’s largest-ever beat, exceeding last quarter’s then-record of $3.0 billion. Earnings per share (“EPS”) of $1.62 exceeded the FactSet consensus estimate of $1.54. And, perhaps most importantly, the company forecasted next quarter’s revenue to be approximately $78 billion, significantly above FactSet’s consensus expectations of $72.9 billion.
Taken as a whole, these results continue to show investors that Nvidia can produce exceptional growth at a massive scale. For their fiscal year that ended in January, Nvidia grew revenues 66%. Free cash flow to the company surged as well, growing to $96.7 billion this year from $60.9 billion a year ago.
Blackwell’s Impact
Nvidia’s latest generation of chips – known as Blackwell – aided the company’s strong results this quarter. Earlier in the year, Nvidia incurred startup costs associated with Blackwell’s design, manufacturing, and production scaling. These additional costs were one cause of Nvidia’s gross margin declining from nearly 79% to 71% over the past few quarters, and they significantly weighed on investors’ minds.
But as these one-time costs associated with the introduction of Blackwell have now mostly passed, Nvidia’s gross margins have expanded, helping to assure investors that demand for Nvidia’s chips – and the company’s pricing power – remain intact. As shown below, gross margins this quarter expanded to 75.1%, above the company’s guidance of 75%. And the company’s forecast for this coming quarter calls for gross margins to remain steady at 75.0%.
Company Commentary
CEO Jensen Huang referenced forward-looking growth drivers a number of times on Nvidia’s conference call. Mr. Huang noted that the company’s next generation of chips – known as Rubin – continues to progress through its own ramp-up phase. Recall that at CES 2026, Mr. Huang teased that Rubin could deliver up to 5x the performance of Blackwell. He used this earnings call to again suggest that substantial performance improvements are coming.
And Mr. Huang went on to talk about how Nvidia is aiming even higher with Rubin by ‘co-designing’ the chip with each customer’s data centers to improve performance. He noted “[with each chip] generation we are committed to deliver many factors of performance improvement per watt. And performance per dollar. Extreme co-design allows us to deliver that value and that benefit to the customer. And that is the single most vital thing as it relates to our value delivered.” On the heels of this, Nvidia reaffirmed previous guidance that the company “expects sequential quarterly revenue growth throughout calendar 2026.”
With Nvidia largely reaffirming its previous revenue guidance and stable gross margins, investors are taking the report in stride, as shares are little changed. The ramp of their latest chip, Blackwell, is delivering on the company’s promise to accelerate revenue and expand gross margins. Their next chip – Rubin – continues to progress through the development pipeline and is expected to drive significant demand in the coming quarters.
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