NVIDIA’s China AI Market Projections and Rubin Ramp Timeline Clash in Earnings Call

Date of Call: Feb 25, 2026

Financials Results

• Revenue: $68B, up 73% year-over-year, accelerating from Q3
• Gross Margin: 75.2% (non-GAAP), increasing sequentially

Guidance:

• Revenue for Q1 FY27 expected to be $78B, plus or minus 2%.
• GAAP and non-GAAP gross margins expected to be 74.9% and 75%, respectively, plus or minus 50 basis points.
• Full year FY27 gross margins expected in the mid-70s.
• Non-GAAP operating expenses expected to be ~$7.5B, including $1.9B stock-based compensation.
• Full year FY27 non-GAAP operating expenses expected to grow low 40s% YOY.
• Full year FY27 tax rates expected between 7% and 19% (excluding discrete items).

Business Commentary:

Revenue Growth and Data Center Expansion:

• NVIDIA reported record revenue of $68 billion for Q4, up 73% year-over-year and with sequential growth also at a record level.
• Growth was primarily driven by a $11 billion increase in Data Center revenue, attributed to strong demand for Blackwell architecture and the transition to accelerated computing infused with AI.

Networking Segment Performance:

• Networking revenue reached $11 billion, more than 3.5x year-over-year growth.
• This was driven by strong adoption of NVLink, Spectrum-X Ethernet, and InfiniBand, with NVLink scale-up fabric playing a significant role.

Gaming and Professional Visualization Segments:

• Gaming revenue was $3.7 billion, a 47% year-on-year increase.
• Professional Visualization revenue crossed $1 billion, with a 159% year-on-year increase, driven by demand for AI workstations and visualization solutions.

Geographic and Customer Diversification:

• Sovereign AI business revenue exceeded $30 billion, more than tripling year-over-year.
• Growth was driven by customers in countries like Canada, France, the Netherlands, Singapore, and the U.K., reflecting a global shift towards AI infrastructure.

Innovation and Product Development:

• NVIDIA unveiled the Rubin platform, with a focus on reducing inference token costs by up to 10x compared to Blackwell.
• The company shipped first samples of Vera Rubin and remains on track for production shipments in the second half of the year.

Sentiment Analysis:

Overall Tone: Positive

• "We delivered another outstanding quarter with record revenue, operating income and free cash flow." "Momentum is strong..." "Demand...is beginning to drive our financial performance." "We look ahead, we expect sequential revenue growth throughout calendar 2026..." "We are thrilled with our ongoing partnership with OpenAI..." "We remain confident in our ability to capitalize on the growth opportunity ahead..."

Q&A:

• Question from Vivek Arya (Bank of America Securities): How confident are you about your customers' ability to continue to grow their CapEx? And if their CapEx doesn't grow can NVIDIA still find a way to grow in that envelope?
  Response: Confident compute demand will grow due to the inflection point of agentic AI and productive token generation, translating directly to revenue growth for cloud providers.

• Question from Joseph Moore (Morgan Stanley): Can you talk about the role of strategic investments and how you view the balance sheet as a tool to grow NVIDIA's position in the ecosystem?
  Response: Investments are focused on expanding and deepening the NVIDIA ecosystem across the entire AI stack to ensure all emerging AI domains are built on NVIDIA.

• Question from Harlan Sur (JPMorgan): What is the Spectrum run rate trending now and as you foresee exiting this calendar year?
  Response: Networking growth is robust due to AI infrastructure scaling, with Spectrum-X Ethernet a home run; NVIDIA is now the largest Ethernet networking company and growing quickly.

• Question from Christopher Muse (Cantor Fitzgerald): Should we be thinking about customized silicon as an increasing focus by NVIDIA?
  Response: Prefers to avoid interfaces; architecture compatibility and CUDA's versatility allow all GPUs to benefit from software optimizations, extending useful life and performance.

• Question from Stacy Rasgon (Bernstein Research): Should we expect similar massive sequential growth with Rubin as with Blackwell? And can Gaming still grow year-over-year in FY27?
  Response: Blackwell and Rubin will overlap; demand for Rubin is strong. Gaming growth is uncertain near-term due to supply constraints, but potential for year-over-year growth exists if supply improves.

• Question from Atif Malik (Citi): Can you touch on the importance of CUDA as more investment dollars are coming from inference workloads?
  Response: CUDA is essential for inference performance, enabling 50x better performance per watt; inference performance directly translates to customer revenues, making architecture choice critical.

• Question from Benjamin Reitzes (Melius Research): Should we read into the visibility on supply being available into calendar '27 that gross margins are sustainable? Are there innovations to sustain margins long-term?
  Response: Sustaining margins depends on delivering generational performance per watt/dollar leads; extreme codesign and annual new chip introductions are key to maintaining value and margin leverage.

• Question from Antoine Chkaiban (New Street Research): How feasible is space data centers and what do the economics look like?
  Response: Economics are poor today due to different cooling methods but will improve; AI in space has good applications like high-resolution imaging and real-time data processing.

• Question from Mark Lipacis (Evercore ISI): Did non-hyperscale customers grow faster? What are they doing different? Do you expect this trend to continue?
  Response: Yes, non-hyperscalers (AI model makers, enterprises, sovereigns, etc.) grew fast; diversity is a strength, and NVIDIA's ecosystem and partnerships make it fungible and safe for investment.

• Question from Aaron Rakers (Wells Fargo): What's the importance of Vera CPUs in architecture evolution, especially for inference workloads?
  Response: Vera is designed for high data processing and single-threaded performance, excelling in post-training and tool-use phases of AI; architectural decisions support data-driven AI workflows.

• Question from Timothy Arcuri (UBS): Can you talk about the deployment of capital, given strong cash generation and flat stock, why not a huge share repo?
  Response: Capital return is considered carefully; strategic investments in ecosystem and suppliers are important, but share repurchases and dividends will continue as opportunities arise.

• Question from James Schneider (Goldman Sachs): What are the key application areas likely to drive the $3B-$4T Data Center CapEx by 2030 inflection?
  Response: Agentic AI and physical AI are key drivers; token generation is central to future software, requiring exponentially more compute, and this trend is seen as the future of computing.

Contradiction Point 1

Customer Growth and CapEx Confidence

Contradiction on confidence in customers' ability to sustain capital expenditure growth.

What is your question for Vivek Arya (Bank of America Securities)? - Vivek Arya (Bank of America Securities)

20260226-2026 Q4: I am confident in their cash flow growing... we've reached the inflection point where compute equals revenues. - Jen-Hsun Huang(CEO)

Given the strong 2027 growth outlook and increased purchase commitments, how confident are you that top cloud customers can sustain CapEx growth, and can NVIDIA still grow without it? - Timothy Arcuri (UBS)

20251120-2026 Q3: All factors (power, financing, memory, foundry) are constraints at this scale of unprecedented growth. - Jen-Hsun Huang(CEO)

Contradiction Point 2

Capital Allocation Priorities

Contradiction on the primary use of significant cash generation.

What are your expectations for revenue growth in the next fiscal quarter? - Timothy Arcuri (UBS)

20260226-2026 Q4: A key priority is supporting the extreme ecosystem (suppliers, developers) to ensure supply and capacity for the future. - Colette Kress(CFO)

Why not execute a large share repurchase given strong cash flow and a flat stock price? - Benjamin Reitzes (Melius)

20251120-2026 Q3: The company will continue stock buybacks. Ecosystem investments are strategic... - Jen-Hsun Huang(CEO)

Contradiction Point 3

Timeline and Ramp of Rubin Product

Inconsistent statements on when Rubin will begin its ramp-up.

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20260226-2026 Q4: For Data Center, Blackwell will be sold alongside the Rubin ramp in H2, with Rubin's ramp timing yet to be finalized. - Colette Kress(CFO)

Will the Rubin ramp see similar acceleration to this quarter's strong sequential growth? - Christopher James Muse (Cantor Fitzgerald)

2026Q2: Rubin is on track for ramp in the second half. - Jen-Hsun Huang(CEO)

Contradiction Point 4

Gaming Segment Growth Outlook

Contradiction on the near-term growth potential for the Gaming business.

What are the main drivers of Q4 performance? - Stacy Rasgon (Bernstein Research)

20260226-2026 Q4: For Gaming, supply is expected to be tight for a couple of quarters; year-over-year growth potential is uncertain. - Colette Kress(CFO)

Will the Rubin ramp see similar acceleration as the strong sequential growth this quarter? - Timothy Michael Arcuri (UBS)

2026Q2: Demand is so high that even large cloud providers are renting capacity from each other. The $600 billion annual hyperscaler CapEx provides a large runway for NVIDIA's growth into the $3-4 trillion global AI build-out through the decade. - Jen-Hsun Huang(CEO)

Contradiction Point 5

Strategic Importance and Timeline for China Market

Inconsistent emphasis on the size and urgency of the China opportunity.

What are your key growth initiatives for the upcoming quarter? - Joseph Moore (Morgan Stanley)

20260226-2026 Q4: The China AI market is estimated to be a $50 billion opportunity this year for NVIDIA, growing at ~50% annually. It is the second-largest computing market globally... NVIDIA is advocating for the U.S. government to allow American tech companies to lead and win the AI race in China, with the hope that Blackwell can be brought to the China market. - Jen-Hsun Huang(CEO)

How do NVIDIA's strategic investments (e.g., Anthropic, OpenAI, and partners like Intel, Nokia, and Synopsis) and its use of the balance sheet contribute to expanding its ecosystem? - Vivek Arya (Bank of America Securities)

2026Q2: Regarding the $2 billion to $5 billion in China, what needs to happen?... The $2B-$5B range is potential for Q3, but the final amount depends on license outcomes. - Colette M. Kress(CFO)