Nvidia revenue rises 69% despite $4.5bn inventory write-down
Shares in Nvidia rose nearly 5% in after-hours trading on Wednesday after the company posted first-quarter earnings that beat market expectations, despite a substantial revenue loss stemming from tightened US export restrictions on chip sales to China.
For the fiscal first quarter of 2026, Nvidia reported total revenue of $44.1 billion (£34.8 billion), up 69% year-on-year.
The company’s core data centre segment led the performance, generating a record $39.1 billion, a 73% increase.
Although this marked a slowdown from the 93% surge recorded in the prior quarter, the figures aligned with analysts' forecasts given the prevailing regulatory challenges.
Earnings per share reached $0.96, ahead of consensus estimates.
NVIDIA today reported record revenue for Q1 FY26 of $44.1 billion, up 12% from the previous quarter and up 69% from a year ago.
The company announced data center revenue of $39.1 billion, up 10% from Q4 and up 73% from a year ago.
Full breakdown ⬇️ https://t.co/3slHxNc5uWNvidia’s chief executive, Jensen Huang, credited the continued growth to rising global demand for artificial intelligence technologies, particularly among major cloud providers.
The firm’s latest AI chip, Blackwell, is now fully in production across system integrators and hyperscale cloud platforms.
“Global demand for Nvidia’s AI infrastructure is incredibly strong,” Huang said. “AI inference token generation has surged tenfold in just one year. Countries are recognising AI as essential infrastructure—like electricity or the internet—and Nvidia is positioned at the heart of this transformation.”
The upbeat results came despite an estimated $8 billion loss in projected revenue tied to US government export controls targeting Nvidia’s H20 graphics processing units destined for China.
The new rules, implemented in the first quarter, required Nvidia to obtain licences for sales of high-performance chips, resulting in $4.5 billion in inventory write-downs.
Absent those charges, the company would have delivered an additional $2.5 billion in revenue and achieved a gross margin of 71.3%. Instead, its gross margin stood at 61%.
Huang acknowledged the hit, calling the $50 billion China market “effectively closed” to US firms. “We are taking a multibillion-dollar write-off on inventory that cannot be sold or repurposed,” he said.
Looking ahead, Nvidia forecast revenue of $45 billion, plus or minus 2%, for the current quarter. It also expects a non-GAAP gross margin of 72%, slightly below the 73.5% posted in the final quarter of 2024.
Despite its challenges in China, Nvidia is expanding elsewhere.
The company is supporting President Donald Trump’s national AI initiatives and recently announced a strategic partnership with Saudi Arabia’s HUMAIN to build AI factories in the kingdom.
The move aligns with Nvidia’s long-term strategy to diversify revenue streams amid geopolitical headwinds.
“While sales in China are clouded by export restrictions, the Middle East looks set to become the new launchpad for Nvidia’s next phase of growth,” said Josh Gilbert, an analyst at eToro Australia.
Following its strong quarterly performance, Nvidia now holds the title of the world’s most valuable publicly listed company, surpassing tech giants Microsoft and Apple in market capitalisation. Its stock is now trading just 8% below its all-time high reached in January.