NVIDIA's AI Dominance Faces the Spotlight: A Deep Dive into Q1 FY2026 Earnings

NVIDIA’s upcoming conference call on May 28, 2025, to discuss its first-quarter fiscal 2026 (Q1 FY2026) results will be a pivotal moment for investors. The quarter, ending April 27, 2025, is expected to underscore NVIDIA’s position as the linchpin of the AI revolution, fueled by its Blackwell supercomputers and strategic partnerships. Yet challenges in its gaming segment and margin pressures loom, making this earnings report a critical test of the company’s ability to sustain its rapid growth.

The Earnings Call at a Glance

The conference call, set for 2:00 p.m. PT, will be webcast live on NVIDIA’s investor relations site. CFO Colette Kress will provide written commentary at 1:20 p.m. PT, followed by prepared remarks and a Q&A session limited to institutional investors. Analysts anticipate the call will reveal how NVIDIA is navigating its $130.5 billion fiscal 2025 revenue momentum—up 114% year-over-year—into FY2026.

Drivers of Growth: AI Infrastructure and Automotive

NVIDIA’s dominance in AI infrastructure remains its core strength. The Blackwell architecture, launched in late 2024, has already generated $11 billion in Q4 FY2025 revenue, the fastest product ramp in the company’s history. This momentum is expected to continue into Q1 FY2026, with data center revenue projected to hit $43.0 billion ±2%, driven by partnerships like the $500 billion Stargate Project with cloud providers AWS and Azure.

The automotive sector is another growth lever. NVIDIA’s DRIVE AGX Orin platform, adopted by Toyota and Hyundai, contributed $570 million in Q4 FY2025 revenue, up 27% sequentially. With agentic AI and physical AI advancements, automotive AI could become a $10 billion annual business for NVIDIA by 2027, according to internal forecasts.

Gaming: Mixed Signals Amid Strategic Shifts

While data center and automotive segments soar, NVIDIA’s gaming division faces headwinds. Q4 FY2025 gaming revenue fell 22% sequentially to $2.5 billion, though full-year gaming revenue grew 9% due to RTX 50 Series launches. The decline reflects a shift in strategy: NVIDIA is prioritizing AI and data center hardware over consumer GPUs, which face competition from AMD and Intel’s new products.

Investors should monitor whether gaming revenue stabilizes in Q1 FY2026. NVIDIA’s focus on AI-first GPUs, such as the Grace Hopper Superchip, could mitigate risks, but the segment’s volatility remains a concern.

Margins and Financial Outlook: Sustaining Growth at Scale

NVIDIA’s financial guidance for Q1 FY2026 includes a GAAP gross margin of 70.6% and non-GAAP margin of 71.0%, slightly below fiscal 2025’s peak of 71.6%. Rising operating expenses—$5.2 billion (GAAP) and $3.6 billion (non-GAAP)—reflect investments in AI research and global data center expansions.

The company’s ten-for-one stock split (effective June 2024) has broadened accessibility, but diluted EPS must now align with investor expectations. Analysts project $0.89 diluted EPS for Q1, up from $0.72 in Q4 FY2025, driven by higher revenues and margin resilience.

Risks and Challenges

• Margin Pressures: Component costs and competition could squeeze margins further.
• Gaming Declines: Consumer demand for GPUs may remain weak if AI hardware cannibalizes resources.
• Regulatory Scrutiny: Antitrust concerns in the U.S. and EU could delay AI partnerships.

Conclusion: NVIDIA’s AI Empire Holds Steady, but Risks Linger

NVIDIA’s Q1 FY2026 results will likely affirm its leadership in AI infrastructure, with $43 billion revenue and $10 billion+ data center sales reinforcing its growth trajectory. The Blackwell architecture’s rapid adoption and automotive AI partnerships position NVIDIA to capture $150–$180 billion in AI-related revenue by FY2027, according to estimates.

However, investors must weigh these positives against margin headwinds and gaming volatility. The stock’s performance—up 32% since the Blackwell launch—reflects optimism, but a stumble in Q1 could test investor confidence.

In the long term, NVIDIA’s ability to monetize AI at scale, from cloud data centers to autonomous vehicles, remains unmatched. For investors, the May 28 earnings call is a chance to gauge whether this tech giant can sustain its AI-powered ascent—or if the challenges ahead require a more cautious stance. The data will speak volumes.