0001045810-26-000052
SEC filingRevenue surged 85% YoY to $81.6B driven by data center AI demand, with gross margin expanding 14.4 pts to 74.9%.
NVIDIA's first quarter of fiscal year 2027 demonstrated exceptional growth. Revenue reached $81.6 billion, an 85% increase year-over-year and 20% sequentially. The growth was primarily fueled by data center products for accelerated computing and AI solutions, with the Blackwell architecture contributing the majority of system shipments. Gross margin expanded significantly to 74.9% from 60.5% a year ago, driven by the absence of the prior year's $4.5 billion charge associated with H20 excess inventory and purchase obligations. Operating expenses rose 52% year-over-year to $7.6 billion, reflecting higher compensation, compute infrastructure, and engineering development costs. Operating income surged 147% to $53.5 billion, and net income jumped 211% to $58.3 billion, resulting in diluted EPS of $2.39 versus $0.76 in the prior year. Net income also benefited from $16.1 billion in other income, primarily due to unrealized gains on equity investments.
The Compute & Networking segment generated $74.6 billion in revenue, up 88% year-over-year, driven by Data Center products including Blackwell systems and networking solutions (InfiniBand, Spectrum-X Ethernet, NVLink). Segment operating income more than doubled to $53.3 billion, with margin improvement from the non-recurrence of the H20 charge. The Graphics segment posted $7.1 billion in revenue, up 58% year-over-year, supported by Blackwell workstation demand, though partially offset by slower consumer PC sales. Operating income for Graphics rose 79% to $2.9 billion. From a market platform perspective, Data Center revenue was $75.2 billion (up 92% YoY), with roughly equal contributions from hyperscalers and diversified customers (AI Clouds, enterprise, sovereign). Edge Computing revenue grew 29% to $6.4 billion, driven by robust workstation demand.
Management expects the Rubin platform to start shipping in the second half of fiscal year 2027, though complexity may cause production delays and supply-demand challenges. The company continues to invest in its ecosystem, with $18.6 billion in private company investments during the quarter. Exports to China remain constrained under a licensing program with no revenue recognized to date. Open-source AI adoption presents competitive risks, while macroeconomic factors such as tariffs and inflation could impact costs and demand. The company maintains strong liquidity with $50.3 billion in cash and marketable debt securities and has authorized an additional $80 billion in share repurchases. No specific numerical guidance for the upcoming quarter was provided.
Net income of $58.3B was significantly higher than operating cash flow of $50.3B, a gap driven largely by $15.9B in unrealized gains on equity securities (non-cash) and $1.9B in stock-based compensation, offset by working capital uses. The cash conversion rate (CFO/Net Income) was 86%, reflecting strong earnings quality despite working capital drag.
Capital expenditures (property, equipment, intangible assets) were $1.8B, representing 3.5% of operating cash flow, a moderate increase from 4.5% in the prior year. The company continues to invest in infrastructure to support growth.
Changes in operating assets and liabilities consumed $3.5B net, driven by $4.4B inventory build, $2.2B increase in receivables, and $1.0B in prepaids, partially offset by $2.2B in payables and $7.8B in accrued liabilities. The large increase in accrued liabilities reflects growth in customer deposits or other obligations.
Share repurchases of $19.3B and dividends of $0.2B totaled $19.5B, fully covered by operating cash flow after capex ($48.5B), yielding a coverage ratio of 2.5x.
The investing section includes $18.6B in purchases of non-marketable securities, a significant increase from $0.6B in the prior year, likely reflecting strategic investments in equity instruments. This is the primary driver of the negative investing cash flow.