Nvidia's 2026 Q1: Key Contradictions in Blackwell Production, Margins, and China Impact

Blackwell production and supply chain constraints, gross margin expectations, issues with product roadmap execution and supply chain, China impact and revenue expectations, and demand for Blackwell and supply chain are the key contradictions discussed in Nvidia's latest 2026Q1 earnings call.



Revenue Growth and AI Expansion:
- NVIDIA Corp reported record revenue of $44 billion for Q1 Fiscal 2026, up 69% year-over-year.
- Growth was driven by strong demand for AI workloads and AI factory buildouts.

Data Center Revenue and Product Introductions:
- The company's Data Center revenue of $39 billion grew 73% year-on-year.
- This increase was attributed to the introduction of new products like GB200 NVL and significant revenue from AI factory buildouts.

Impact of Export Controls and China Market:
- NVIDIA recognized a $4.6 billion charge related to the U.S. government's export controls on H20 GPU, which led to a $4.5 billion write-off.
- This was due to the inability to ship ordered H20 GPUs after April 9, affecting China AI accelerator market participation.

Inference Demand and Product Innovation:
- NVIDIA witnessed a sharp jump in inference demand, with Microsoft processing over 100 trillion tokens in Q1, a five-fold increase year-on-year.
- This growth is attributed to the development of reasoning AI models, like DeepSeek-R1, which require high computational resources.

Networking Business and Product Adoption:
- Networking revenue grew by 64% quarter-over-quarter to $5 billion.
- This was driven by increased adoption of Spectrum-X and NVLink, enhancing AI factory scaling capabilities.