NVIDIA: A Strategic Buy Ahead of Q1 FY26 Results?

The tech sector's next major inflection point arrives on June 25, 2025, as NVIDIA prepares to report its first-quarter fiscal 2026 (Q1 FY26) earnings. With AI infrastructure demand surging and geopolitical risks reshaping the semiconductor landscape, investors face a critical decision: Should you buy NVIDIA before the results? This analysis breaks down the catalysts, risks, and why now could be a pivotal time to position for long-term gains.

Earnings Momentum: A Catalyst for Growth

NVIDIA's Q1 FY26 results are expected to reflect its dominance in AI-driven markets. Here's what the numbers reveal:
- Revenue: Analysts project $45.0 billion, up 12% sequentially from Q4 FY25, driven by 88% of revenue coming from the data center segment.
- Gross Margins: Despite a $4.5 billion charge tied to U.S. export restrictions on its H20 GPUs to China, non-GAAP margins are expected to rebound to 72% in Q1, with a mid-70% target for the year.
- AI Demand: AI inference token generation has skyrocketed 10x YoY, fueled by agentic AI models requiring NVIDIA's Blackwell GPUs. Cloud providers like Microsoft are deploying tens of thousands of these chips, with Blackwell-based instances now live on AWS, Google Cloud, and Azure.

Customer Demand: The Data Center and Gaming Flywheels

The company's two core segments—data center and gaming—are firing on all cylinders:
1. Data Center: NVIDIA's $39.1 billion Q1 revenue here (up 73% YoY) underscores the shift to AI-native infrastructure. Cloud providers now account for nearly half of data center sales, with Blackwell GPUs enabling everything from large language models to autonomous robotics.
2. Gaming: The $3.8 billion gaming segment hit a record high, driven by sales of the GeForce RTX 5000 series and the NVIDIA-powered Nintendo Switch 2. This shows that even as AI dominates headlines, gaming remains a cash cow.

Geopolitical Risks: Navigating the U.S.-China Divide

The elephant in the room is the U.S. government's April 2025 export restrictions on H20 GPUs to China, which cost NVIDIA $2.5 billion in Q1 sales and are projected to reduce Q2 revenue by an additional $8 billion. CEO Jensen Huang has called China's AI chip market “effectively closed” to U.S. firms.

But NVIDIA isn't passive. It's pivoting aggressively:
- Global Manufacturing: Building U.S. factories and partnering with Saudi Arabia, Taiwan (via Foxconn), and the UAE to offset lost Chinese sales.
- New Architectures: Shifting focus to Blackwell, which isn't subject to the same restrictions, and launching Blackwell Ultra/Dynamo chips for advanced AI reasoning.
- Diversification: Europe and India are emerging as growth markets, with the EU's AI Act prioritizing U.S.-aligned infrastructure.

Investment Thesis: Buy Before June 25

Why now?
- Valuation: NVIDIA's stock (NVDA) trades at a forward P/E of 28x, reasonable for a company growing AI revenue at 70%+ YoY.
- Catalysts Before June 25:
- Q1 Results: If margins rebound to 72% and Blackwell adoption exceeds expectations, the stock could rally.
- Stockholder Meeting: The June 25 virtual meeting may clarify strategies on global partnerships and geopolitical risks.
- Long-Term Bet: AI is a multi-decade trend. NVIDIA's CUDA ecosystem and AI factories (e.g., Stargate UAE) lock in customers, creating a moat against AMD and Intel.

Risks to Consider

• China Dependency: Even with diversification, losing China's data center market permanently could cap growth.
• Competition: AMD's MI300X and Intel's Ponte Vecchio are gaining traction, though NVIDIA's software stack remains unmatched.
• Margin Pressures: The H20 charge and geopolitical costs could weigh on short-term earnings.

Final Take: Buy the Dip, Hold the Trend

NVIDIA's Q1 results will be a litmus test for its ability to navigate U.S.-China tensions while capitalizing on AI's growth. Buy before June 25 if:
- You're bullish on AI's long-term trajectory.
- You believe NVIDIA's global partnerships (e.g., Middle East, Europe) can offset China losses.
- You're willing to tolerate volatility tied to geopolitical headlines.

Actionable Advice:
- Aggressive Investors: Allocate 5–10% of your portfolio to NVDA, targeting a $160–$180 price target by year-end 2025.
- Conservative Investors: Wait for post-earnings clarity but keep an eye on Blackwell Ultra adoption and margin recoveries.

In a world where AI is the new oil, NVIDIA is the refinery—and June 25's results could determine whether the stock fuels your portfolio's next leg higher.

Data sources: NVIDIA Q1 FY26 earnings preview, analyst reports, and geopolitical updates.