Nvidia beats earnings with a 75% surge in revenue growth, stock rallies 6% after close

Nvidia CEO Jensen Huang weighed in Wednesday on the standoff between the U.S. Defense Department and Anthropic, brushing off the idea that it is some kind of crisis.

The tension escalated after Defense Secretary Pete Hegseth reportedly gave Anthropic until Friday to loosen restrictions on how the Pentagon can use its AI tools.

If the company refuses, Hegseth has threatened to label Anthropic a “supply chain risk” or even invoke the Defense Production Act, according to CNBC earlier this week.

Speaking to CNBC’s Becky Quick, Jensen said the Defense Department has every right to use the technology and products it buys in ways that serve its mission. At the same time, he said Anthropic also has the right to decide how its products are marketed and what use cases it supports.

“So I think they both have their reasonable perspective,” Jensen said.

He made it clear he hopes the two sides can reach an agreement. But he also downplayed the fallout if they do not.

“I hope that they can work it out, but if it doesn’t get worked out, it’s also not the end of the world,” Jensen said, adding that Anthropic is not the only AI company out there and the Defense Department is not the only potential customer.

Nvidia CEO Jensen Huang pushed back hard on the idea that AI is about to wipe out software companies. Speaking to just hours after Nvidia issued a strong sales forecast, Jensen said investors have misread the situation.

“I think the markets got it wrong,” Jensen said, responding to concerns that AI agents could cannibalize the enterprise software industry.

His view is the opposite. He expects a wide range of software companies to lean into agentic AI to build better products and improve efficiency, not get replaced by it.

Jensen called the dynamic “counterintuitive.” He said AI agents will not replace existing tools. They will use them. “That’s the reason why we also say agents are tool users,” he explained.

He pointed to everyday examples like internet browsers and Microsoft Excel. According to Jensen, tools such as Cadence, Synopsys, ServiceNow and SAP exist because they solve real problems, and that does not change in an AI world.

“These agentic AI will be intelligent software that uses these tools on our behalf and help us be more productive,” Jensen said.

He added that companies like ServiceNow are not going anywhere.

“Nobody’s going to service better than ServiceNow, and they’re going to come up with agents that are really fine-tuned and optimized for the work that uses the tools that they have.”

In his view, humans still need structured systems at the end of the process. “In the end, we need the tools to finish their work and put the information back in a way that we can understand,” said Jensen.

Nvidia is changing how it reports results starting in the first quarter of fiscal 2027. The company will begin including stock-based compensation expense in its non-GAAP financial measures. Management says stock comp is a core part of how it attracts and keeps top talent.

For the first quarter of fiscal 2027, Nvidia expects revenue of $78 billion, plus or minus 2%. The company made it clear that this outlook does not assume any Data Center compute revenue from China.

GAAP gross margin is projected at 74.9%, and non-GAAP gross margin at 75.0%, both plus or minus 50 basis points. That guidance includes a 0.1% impact from stock-based compensation.

Operating expenses are expected to come in around $7.7 billion on a GAAP basis and $7.5 billion on a non-GAAP basis. Those figures include roughly $1.9 billion in stock-based compensation expense.

For the full fiscal year 2027, Nvidia expects both GAAP and non-GAAP tax rates to fall between 17% and 19%, excluding any one-off items or major changes in the tax environment.

Other income made a real difference this quarter. GAAP other income and expense includes interest income, interest expense, and unrealized gains or losses on non-marketable and publicly held equity securities.

The non-GAAP figure strips out those unrealized gains and losses.

Interest income came in at $568 million, up from a year ago but down from last quarter, mainly because of shifts in cash, cash equivalents, and debt securities balances.

Net other income totaled $5.6 billion, largely driven by unrealized gains on equity investments, including the previously announced stake in Intel’s common stock.

The GAAP effective tax rate was 14.8% for the fourth quarter and 15.1% for the full fiscal year. That is higher than a year ago, mostly due to a smaller benefit from stock-based compensation. On a non-GAAP basis, the tax rate was 15.4% for the quarter and 16.1% for the year.

On the balance sheet, cash, cash equivalents, and marketable securities rose to $62.6 billion, up from $43.2 billion a year ago and $60.6 billion last quarter.

Accounts receivable stood at $38.5 billion with 51 days sales outstanding, down from 53 days sequentially because of the timing of cash collections. Inventory reached $21.4 billion, up from $19.8 billion last quarter.

Total supply-related commitments were $95.2 billion, as the company secured inventory and capacity to meet demand beyond the next several quarters.

Multi-year cloud service agreements rose to $27 billion, up from $26 billion sequentially, supporting expanding research and development needs.

Cash flow from operating activities hit $36.2 billion, up from $16.6 billion a year ago and $23.8 billion last quarter.

Nvidia returned $4.1 billion to shareholders in the fourth quarter, including $3.8 billion in share repurchases and $243 million in dividends.

For fiscal 2026, total capital returned reached $41.1 billion, made up of $40.1 billion in buybacks and $974 million in dividends.

The real engine this quarter was the data center business. Revenue hit a record $62.3 billion, up 75% year over year and up 22% from last quarter. Nvidia says that strength came from the big shift to accelerated computing and AI.

Hyperscalers still make up just over 50% of data center revenue, but growth was actually led by the rest of the customer base as sales broadened out.

Drilling down, data center compute revenue reached $51.3 billion, up 58% from a year ago and 19% sequentially.

Networking revenue came in at a record $11 billion, exploding 263% year over year and rising 34% from the prior quarter, helped by the ramp of NVLink compute fabric for GB200 and GB300 systems along with growth in Ethernet and InfiniBand.

Gaming also had a strong year-over-year comparison. Revenue in that segment rose 47% from a year ago, driven by demand for Blackwell.

But it fell 13% sequentially as channel inventory cooled off after the holiday rush. Nvidia expects supply constraints to weigh on gaming in the first quarter of fiscal 2027 and beyond.

Professional Visualization was a standout. Revenue jumped 159% year over year and 74% sequentially, again tied to heavy demand for Blackwell.

Automotive revenue rose 6% from a year ago and 2% from last quarter, supported by continued adoption of Nvidia’s self-driving platforms.

Margins improved. Both GAAP and non-GAAP gross margins increased from a year ago due to lower inventory provisions, and they also improved sequentially as Blackwell ramped with a better mix and cost structure.

Expenses moved higher. GAAP operating expenses rose 45% year over year and 16% sequentially. Non-GAAP operating expenses climbed 51% from a year ago and 21% from last quarter.

The increases were mainly tied to higher compensation and benefits from employee growth, as well as compute and infrastructure costs.

Sequentially, engineering materials for new product launches and infrastructure spending were the main drivers.

U.S. equities climbed Wednesday, building on the prior session’s gains, with Nvidia and Oracle helping set the tone.

The S&P 500 rose 0.81% to close at 6,946.13. The Nasdaq Composite gained 1.26%, finishing at 23,152.08. The Dow Jones Industrial Average added 307.65 points, or 0.63%, ending at 49,482.15.

Nvidia shares were up 1.4% heading into its earnings release after the bell. Salesforce and Snowflake are also reporting after the close.

Investors are still reassessing stretched tech valuations and questioning how sustainable hyperscalers’ heavy AI capital spending really is.

Software stocks kept running. The iShares Expanded Tech-Software Sector ETF, ticker IGV, jumped 3% on Wednesday after rising nearly 2% the day before. Palantir and Microsoft both moved higher as money flowed back into the group.

Tuesday’s rally set the backdrop. Major indexes advanced as concerns about AI disruption across several industries cooled.

Software and cybersecurity names caught a relief bid after Anthropic introduced new connectors and plugins for its knowledge worker tool, Claude Cowork, allowing companies to link it directly to existing apps like Google Drive.

Nvidia’s numbers are expected to show strong sales of its current rack-scale systems, but traders are really focused on what comes next. That next chapter is Vera Rubin, the company’s new AI system scheduled to roll out later this year.

Vera Rubin is massive. Nvidia says it is built from 1.3 million components and delivers 10 times more performance per watt than its predecessor, Grace Blackwell.

That matters because energy use has become one of the biggest pressure points in the AI build-out. More power, less electricity. That is the pitch.

The system is not just about chips. At its core are 72 Rubin GPUs and 36 Vera CPUs, with the main silicon produced by Taiwan Semiconductor Manufacturing Co. The rest of the machine is a global operation.

More than 80 suppliers across at least 20 countries provide parts, including liquid cooling, power systems and compute trays. Countries in that chain include China, Vietnam, Thailand, Mexico, Israel and the U.S.

Memory costs are a growing headache. A global shortage driven by AI demand has pushed prices higher.

Dion Harris, Nvidia’s head of AI infrastructure, said the company has been giving suppliers very detailed forecasts to stay ahead of bottlenecks. He said everything Nvidia is shipping is aligned with its supply chain and added that the company is in good shape.

The timing is crucial. Nvidia still dominates AI processors, but competition is heating up from Advanced Micro Devices, custom silicon from Broadcom and Google’s in-house tensor processing units.

Nvidia plans to manufacture up to $500 billion of AI infrastructure in the U.S. through 2029, including Blackwell GPUs at TSMC’s new Arizona facilities.

Grace Blackwell entered production in 2024 and redefined how much compute a single system could handle. Vera Rubin, expected to ship in the second half of 2026, pushes that further. Jensen Huang said in January that the system was already in full production.

Currency markets are steady but active as traders position around the dollar.

In the majors, USD/CHF sits at 0.773, down 0.001 or 0.091%. EUR/GBP trades at 0.873, up 0.001 or 0.06%. AUD/USD is stronger at 0.711, rising 0.005 or 0.71%, while AUD/JPY climbs to 110.7, up 0.71 or 0.65%.

USD/CAD comes in at 1.368, down 0.002 or 0.146%. USD/JPY is at 155.81, slipping 0.07 or 0.045%. EUR/USD trades at 1.18, up 0.003 or 0.246%, and EUR/JPY stands at 183.86, higher by 0.37 or 0.2%. GBP/USD is at 1.351, up 0.003 or 0.2%, while EUR/CHF ticks up to 0.912, gaining 0.001 or 0.15%.

Across the Americas, USD/CLP is 860, down 0.2 or 0.023%. USD/BRL trades at 5.152, lower by 0.002 or 0.029%. USD/ARS jumps to 1,379, up 11 or 0.8%.

USD/MXN is 17.162, down 0.003 or 0.018%. USD/COP sits at 3,701.62, up 3.02 or 0.08%, and USD/CRC trades at 471.91, rising 0.54 or 0.11%.

In Asia-Pacific, USD/KRW drops to 1,432.31, down 9.03 or 0.627%. USD/SGD is 1.264, lower by 0.002 or 0.174%. USD/INR edges up to 90.93, gaining 0.032 or 0.035%. NZD/USD trades at 0.598, up 0.002 or 0.369%. USD/HKD stands at 7.819, down 0.004 or 0.049%.

In Europe, USD/RUB is 76.35, down 0.25 or 0.326%, while USD/SEK trades at 9.021, lower by 0.031 or 0.343%.

Wayve just locked in an $8.6 billion valuation after raising $1.2 billion in a Series D round backed by Nvidia, Microsoft and Uber.

The round was led by Eclipse, Balderton and SoftBank Vision Fund 2. Automakers Mercedes-Benz, Nissan and Stellantis also took part. Uber is going further, committing up to an additional $300 million in milestone-based capital.

Alex Kendall, Wayve’s CEO, said the company is “building for a total addressable market that spans every vehicle that moves.” He added that the new funding speeds up commercial deployment and helps the company build what he calls the autonomy layer for vehicles everywhere.

Wayve was founded in 2017 in the U.K. and focuses on autonomous driving software and AI models. Before this round, the company had already raised more than $1 billion, making it one of Europe’s most valuable startups.

In 2025, Wayve signed a deal with Nissan to integrate its AI into driver-assistance systems, with vehicles using the tech expected to roll out starting in 2027.

The company also plans to begin public robotaxi trials with Uber in London in 2026, followed by expansion into more than 10 global markets.