NVIDIA Crushes Earnings On Huge Data Center And Gaming Demand, Despite Export Limitations
NVIDIA continues to reap the benefits of skyrocketing demand for its data center solutions, and it also achieved record first quarter revenue from its gaming division. Combined with mostly steady performance from its other segments, the AI chip juggernaut reported $44.1 billion in revenue for its first quarter of fiscal 2026, which represents a 12% gain from its previous monster quarter, and a massive 69% spike from a year ago.
The company's impressive financial figures takes into account a not-insignificant $4.5 billion charge incurred from a chip inventory write-down, meaning it produced chips that it was not able to sell. The reason? It mainly boiled down to export restrictions to China, resulting in $2.5 billion in lost H20 chip sales. Not only was NVIDIA able to absorb a huge financial hit from new licensing rules affecting its ability to ship H20 chips to China, but it managed to still thrive.
"Global demand for NVIDIA’s AI infrastructure is incredibly strong. AI inference token generation has surged tenfold in just one year, and as AI agents become mainstream, the demand for AI computing will accelerate," said Jensen Huang, co-founder and CEO of NVIDIA. "Countries around the world are recognizing AI as essential infrastructure—just like electricity and the internet—and NVIDIA stands at the center of this profound transformation."
Despite the sales ban, NVIDIA said sales of its H20 products tallied $4.6 for the first quarter.This pushed NVIDIA's data center revenue to $39.1 billion, which is up 10% from the previous quarter and up a staggering 73% from a year ago. The data center remains NVIDIA's biggest earner and it's not even close.
Still, it could be even higher with key governmental policy changes that NVIDIA is advocating for. During an earnings call to discuss the company's Q1 performance, NVIDIA Chief Financial Officer and Executive Vice President Colette Kress said the export restrictions on NVIDIA's H20 hardware, which "does not have a market outside of China," came without a grace period that would have allowed NVIDIA to sell through its inventory.
Huang also talked about the implications of export restrictions to China. According to Huang, China is "one of the largest AI markets and a springboard to global success," but export rules effectively close off a massive $50 billion to U.S. industry.
"We cannot reduce Hopper further to comply. As a result, we are taking a multibillion dollar write off on inventory that cannot be sold or repurposed. We are exploring limited ways to compete, but Hopper is no longer an option.
China’s AI moves on with or without US chips," Huang said.
He also said that it's not a question of whether China will have AI, because "it already does," but whether "one of the world's largest AI markets will run on American platforms. Huang added that current U.S. policies are based on the "clearly wrong" assumption that China can't make AI chips.
It will be interesting to keep an eye on the situation going forward, as Huang also praised U.S. President Donald Trump for a "bold vision" to bolster domestic chip manufacturing.
The other interesting part about NVIDIA's latest financial results is a massive uptick in gaming revenue. Gaming accounted for $3.8 billion, the most ever in a first quarter for NVIDIA. That also represents a substantial 48% gain compared to the previous quarter, and 42% from a year ago.
Despite criticisms over partner pricing and availability, it's clear that the GeForce RTX 50 series is boosting NVIDIA's bottom line. Bear in mind that NVIDIA's Q1 results don't even reflect a full quarter of sales for its mainstream GeForce RTX 5070 and 5060 cards. However, it likely reflects revenue from Nintendo's ramp of Switch 2 hardware, which launches to retail next week (see our Switch 2 launch/preorder guide).
"In console gaming, the recently unveiled Nintendo Switch two leverages NVIDIA’s neural rendering and AI technologies, including next generation custom RTX GPUs with DLSS technology to deliver a giant leap in gaming performance to millions of players worldwide. Nintendo has shipped over 150 million Switch consoles to date, making it one of the most successful gaming systems in history," Kress said.
Looking forward, NVIDIA said it anticipates second-quarter revenue settling in at $45 billion, plus or minus 2%. That forecast takes into account an anticipated $8 billion loss in H20 revenue.
