Nvidia (NASDAQ:NVDA) eased fears of a potential artificial intelligence slowdown after delivering quarterly results that comfortably exceeded expectations and issuing revenue guidance ahead of forecasts for the current quarter.
Despite the strong performance, shares of the world’s most valuable publicly traded company gained only slightly — rising just over 1% in premarket trading and remaining muted in extended-hours activity — as investors continued to question when the company’s powerful cash generation will translate into larger shareholder returns.
Like other members of the “Magnificent 7” technology group, Nvidia’s stock performance has been relatively restrained in 2026, advancing 3.59% year to date. Even so, it remains the best performer within the cohort and continues to outperform the broader S&P 500 index.
Earnings provide renewed support for AI investment theme
Nvidia’s results arrive amid growing debate around the sustainability of the artificial intelligence investment boom. Market sentiment has shifted rapidly in recent weeks, moving from expectations that AI would broadly lift the technology sector to a more selective outlook focused on clear winners and losers.
Industries including software, enterprise services, office applications and food delivery have increasingly been highlighted as areas vulnerable to AI-driven disruption. These concerns have compounded worries about elevated valuations among large technology firms and heavy capital spending tied to AI expansion.
Against this backdrop, Nvidia’s earnings carried heightened importance. Since the surge in AI adoption beginning in late 2022, the chipmaker has become the largest listed company globally thanks to its leadership in graphics processing units that power AI workloads, making its results a key barometer for the sector.
Demand for Nvidia’s chips continued to accelerate in the fourth quarter of its fiscal year, particularly in data centers. Revenue from the segment surged 75% year over year to a record $62.31 billion, with hyperscale cloud providers accounting for slightly more than half of total data center sales.
“Computing demand is growing exponentially — the agentic AI inflection point has arrived. Grace Blackwell with NVLink is the king of inference today — delivering an order-of-magnitude lower cost per token — and Vera Rubin will extend that leadership even further,” CEO Jensen Huang said in a statement.
“Enterprise adoption of agents is skyrocketing. Our customers are racing to invest in AI compute — the factories powering the AI industrial revolution and their future growth,” he added.
For fiscal fourth quarter 2026, Nvidia reported earnings of $1.62 per share on revenue of $68.13 billion, surpassing analyst expectations of $1.52 per share and $65.56 billion in revenue.
Revenue growth reached 73% year over year in the quarter — the strongest pace of fiscal 2025 — compared with 62% growth in the prior quarter, 56% in the second quarter and 69% in the first. Full-year fiscal 2026 revenue climbed 65% year over year to $215.94 billion.
Adjusted gross margin improved by 1.7 percentage points year over year to 75.2%, supported by lower inventory-related provisions.
Investor focus turns to shareholder returns
Even with the strong results, some investors expressed concern that Nvidia is not returning enough capital to shareholders.
Yvette Schmitter, CEO of IT consulting firm Fusion Collective, noted that Nvidia generated $35 billion in cash during the fourth quarter but returned only 12% to investors, compared with 52% during the same period last year.
Schmitter added that “this is happening at the same time Nvidia is claiming” that its sold-out Ampere chips are a “good signal for demand.”
“[W]hy is the company with record cash generation cutting buybacks by half?” Schmitter told Investing.com.
Similar questions were raised during Nvidia’s earnings call, when a UBS analyst asked whether the company planned to return part of the roughly $100 billion in cash expected this year. Chief Financial Officer Colette Kress emphasized continued reinvestment across the broader AI ecosystem, while CEO Jensen Huang argued that AI model output will underpin the next generation of computing.
Revenue outlook easily beats forecasts
Looking ahead, Nvidia projected fiscal first-quarter 2027 revenue of $78 billion, plus or minus 2%, comfortably above consensus estimates of $72.78 billion and implying year-over-year growth of roughly 77%. The company noted that its outlook does not assume any data center compute revenue from China.
“The AI Infrastructure Trade is alive and well,” Gene Munster, managing partner at Deepwater Asset Management, said in a social media post.
“The bar was high going into (NVDA’s) earnings. Most investors were expecting the high end of the April revenue guide would imply around 70% yy growth. The actual guide high end implies 79%,” he said.
“The investor focus for (NVDA) is now on CY27 revenue growth. The Street is at 28%. I expect that will move to 35% tonight when analysts update their models and believe actual growth will be closer to 50%,” Munster added.
Nvidia’s quarterly updates have become major market-moving events in recent years. However, Reuters reported earlier that options markets had priced in the smallest post-earnings share swing in three years. Analysts at DA Davidson also suggested ahead of the results that increasing competition may reduce the company’s broader market impact compared with previous cycles.
“The only real area of concern seems to be the long-term plan for China and Nvidia’s ability to continue doing business there, especially as Chinese competitors begin to take market share in Nvidia’s absence,” Steve Kolano, chief investment officer at Integrated Partners, told Investing.com.
Limited China revenue visibility and OpenAI uncertainty
Separately, Nvidia provided updates regarding its H200 AI chips and operations tied to China. The administration of President Donald Trump recently approved conditional exports of the chips to Chinese customers.
In a regulatory filing, Nvidia said the U.S. government granted a license in February allowing shipments of “small amounts” of H200 products to select China-based buyers.
“To date, we have not generated any revenue under the H200 licensing program, and do not yet know whether any imports will be allowed into China,” the company said.
“The license requires that the H200s go through an inspection process in the United States prior to any shipment to the customer. As a result, any H200 shipped under the new licensing program will be subject to a 25% tariff upon importation into the United States,” it added.
Nvidia also disclosed it is “finalizing an investment and partnership agreement” with OpenAI, while cautioning that there is “no assurance” such a deal will ultimately be completed.
Media reports previously indicated the company was nearing a $30 billion investment in the ChatGPT developer.