Performance "bomb" smashes the bubble theory! NVIDIA Corporation (NVDA.US) Q4 revenue hits a new high, outlook exceeds expectations. Huang Renxun declares that the "AI industrial revolution" is just beginning.

The AI chip leader NVIDIA Corporation announced another "explosive" performance. At a time when investor panic intensified with a series of products released by Anthropic and Citrini's "Doomsday Report", NVIDIA Corporation's latest performance continues to prove that the demand generated by AI is still strong and the large-scale construction of AI infrastructure is still on track. According to the financial report, in the fourth quarter of the fiscal year 2026 ending on January 25th, NVIDIA Corporation's revenue increased by 73% year-on-year to a record high of $68.1 billion, beating analysts' general prediction of $65.9 billion. In terms of business segments, the data center business (responsible for its industry-leading AI accelerators and networking products) saw a fourth quarter revenue growth of 75% year-on-year to $62.3 billion, also reaching a record high and exceeding the analysts' general prediction of $60.4 billion. However, other businesses showed relatively weaker performance. The gaming business (which used to be the main source of revenue for NVIDIA Corporation) saw a revenue growth of 47% year-on-year to $3.73 billion, lower than the analysts' general prediction of $4.01 billion; the automotive business saw a revenue growth of 6% year-on-year to $0.604 billion, below the analysts' general prediction of $0.643 billion. In terms of profitability, under the Non-GAAP accounting standards, operating profit increased by 81% year-on-year to $46.1 billion, and net profit increased by 79% year-on-year to $39.6 billion. The adjusted earnings per share were $1.62, better than the analysts' general prediction of $1.53. The adjusted gross margin was 75.2%, slightly higher than the analysts' general prediction. Colette Kress, the CFO of NVIDIA Corporation, said that the year-on-year improvement in gross margin was due to "reduced inventory provisions", and the quarter-on-quarter improvement was related to the "better product structure and cost structure" brought about by the continued mass production of the Blackwell chip. What is even more encouraging for investors is that NVIDIA Corporation has provided better-than-expected guidance for the first quarter of fiscal year 2027. NVIDIA Corporation expects first quarter revenue to be $78 billion (2%), significantly exceeding the analysts' general prediction of $72.8 billion, and implying a year-on-year growth rate of 77%. Analysts pointed out that NVIDIA Corporation's fourth quarter total revenue and data center revenue both exceeded expectations and reached new highs, and the gross margin continued to improve with the production ramp-up of the new generation architecture Blackwell chip, and the guidance for the first quarter of fiscal year 2027 without including some revenue from the Chinese market is stronger, reinforcing the narrative of the resilience of AI compute demand and helping to alleviate market concerns about an AI investment bubble. NVIDIA Corporation CEO Jensen Huang said, "Our customers are investing in AI compute these compute factories are fueling the AI industrial revolution and its future growth." Huang has repeatedly downplayed concerns about the sustainability of AI hardware spending. He believes that it will take several years to replace the global old computer infrastructure with machines that can leapfrog productivity. One major cloud looming over the tech industry is the shortage of storage chips. Like most companies in the electronics industry, NVIDIA Corporation's products depend on a stable supply of these components these storage chips provide short-term storage for devices from smartphones to supercomputers. Supply constraints have pushed up storage chip prices and put pressure on NVIDIA Corporation's shipments this year. In response, NVIDIA Corporation stated that the company has ample supply, "We have strategically locked in inventory and capacity to meet demand beyond the next several quarters." Earlier this month, NVIDIA Corporation announced that Meta Platforms (formerly Facebook) has agreed to deploy "millions" of NVIDIA Corporation AI chips over the coming years, further deepening the already close partnership between the two AI giants. NVIDIA Corporation's primary competitor AMD also announced a similar long-term agreement with Meta this week. The company stated that the deal is worth billions of dollars. Chip manufacturers are using a series of such huge deals as evidence that AI demand remains strong. These deals aim to secure long-term compute commitments. However, the "intimacy" of these transactions where suppliers and customers sometimes own stakes in each other has also sparked criticism, suggesting that such circular transactions may artificially inflate demand. Another significant issue is that NVIDIA Corporation is still waiting for clear guidance on whether it can continue to operate in China. China is its largest market, and NVIDIA Corporation's ability to sell its most advanced products to Chinese customers remains restricted. NVIDIA Corporation stated that its first quarter revenue outlook does not include any revenue from Chinese data center business. However, the company stated in a filing that it has obtained US approval this month to export "a small amount" of H200 chips to customers in the Asian country. NVIDIA Corporation stated, "As of now, we have not generated any revenue under the H200 license program, and it is not clear whether any products will be allowed to enter China. The license requires that H200 chips undergo inspection in the US before they are shipped to customers. Therefore, any H200 chips exported under the new license will be subject to a 25% duty when imported back into the US."