From Motley Fool Transcribing, Feb. 25:
CALL PARTICIPANTS
- President and Chief Executive Officer — Jensen Huang
- Executive Vice President and Chief Financial Officer — Colette Kress
- Vice President, Investor Relations — Toshiya Hari
TAKEAWAYS
- Total revenue -- $68 billion, up 73% year over year, with sequential acceleration from Q3.
- Data Center revenue -- $62 billion, up 75% year over year and 22% sequentially, fueled by demand for Blackwell and Blackwell Ultra systems.
- Annual Data Center revenue -- $194 billion, up 68% for the fiscal year; business scaled nearly 13x since 2023 emergence of ChatGPT.
- Networking revenue -- $11 billion for the quarter, over 3.5x year over year; full-year Networking exceeded $31 billion, up more than 10x versus fiscal 2021 (year of Mellanox acquisition).
- Sovereign AI revenue -- Over $30 billion for the year, more than tripling, primarily from Canada, France, the Netherlands, Singapore, and the UK.
- China segment -- While small amounts of H200 products for China received approval, no related revenue was generated, with continued uncertainty around future imports.
- Gaming revenue -- $3.7 billion, a 47% increase year over year, supported by Blackwell demand and improved supply.
- Professional Visualization revenue -- $1.3 billion, up 159% year over year and 74% sequentially, marking its first time above $1 billion.
- Automotive revenue -- $604 million, up 6% year over year, attributed to demand for self-driving solutions.
- Physical AI revenue contribution -- Physical AI added more than $6 billion in annual revenue.
- Free cash flow -- $35 billion in the quarter, totaling $97 billion for the year.
- Capital return -- $41 billion, or 43% of annual free cash flow, returned to shareholders through share repurchases and dividends.
- GAAP gross margin -- 75% in the quarter; non-GAAP gross margin at 75.2%, up sequentially as Blackwell ramped.
- Quarterly outlook -- Revenue projected at $78 billion (±2%), with GAAP gross margin at 74.9% (±50 bps) and non-GAAP gross margin at 75% (±50 bps); majority of growth expected from Data Center.
- Inventory -- Grew 8% sequentially; purchase commitments increased significantly to secure supply and address longer-term demand into 2027.
- Research & Development -- Annual R&D budget now approaching $20 billion, supporting generational architectural development and codesign innovation.
- Rubin platform launch -- Six new chips introduced, with Vera Rubin samples shipped and production shipments on track for the second half, promising 10x lower inference costs than Blackwell.
- Major partnerships -- Notable strategic collaboration includes a $10 billion investment in Anthropic, ongoing partnership expansion with OpenAI, and new agreement with Groq.
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RISKS
- Ongoing supply constraints for advanced architectures, with supply expected to remain tight despite increased inventory and purchase commitments.
- Uncertainty regarding future revenue from China, as approvals have not yet translated to recognized sales and regulatory conditions remain unresolved.
- Colette Kress noted, "we expect supply constraints to be the headwind to Gaming in Q1 and beyond."
- Competitive progress from China-based rivals with recent IPOs, raising potential for long-term disruption in the global AI industry structure.
SUMMARY
The call revealed outsized growth in Data Center and Networking revenue underpinned by expanded customer diversity, new product introductions, and a reinforced leadership strategy—particularly through the rapid adoption of Blackwell and the early momentum of Rubin platform pre-shipments. NVIDIA (NVDA +1.44%) asserted robust visibility into future demand, supported by sizable purchase commitments and strategic investments, including a $10 billion outlay in Anthropic and deepened OpenAI engagement. While record free cash flow enabled large-scale capital returns, management underscored continued discipline in balancing ecosystem investments with shareholder payouts. Guidance for the coming quarter points to further acceleration in Data Center, a stable gross margin profile, and the expectation of supply-driven headwinds particularly in Gaming, amid persistent regulatory and competitive uncertainties concerning China and global AI markets.
- Jensen Huang said, "compute equals revenues," highlighting the company view that AI infrastructure investment directly drives customer revenue and demand for NVIDIA technology.
- Meta and Anthropic are scaling with "millions of Blackwell and Rubin GPUs," underlining a market landscape shaped by rapid generative and agentic AI adoption.
- Spectrum X Ethernet and NVLink fabric recorded record demand as customers unify distributed data centers into "integrated gigascale AI factories."
- Physical AI use cases, spanning robotic fleets and automotive, signify a broadening revenue base, with robotaxi ride volumes described as "growing exponentially."
- NVIDIA’s software ecosystem, with CUDA’s reach to "one and a half million AI models on Hugging Face," underscores a strategic moat based on developer and model diversity.
- Management projects that, over the long term, the Sovereign AI segment will grow at least in line with AI infrastructure spending proportional to GDP, signaling secular opportunity beyond hyperscalers.
- Kress explained, "The single most important lever of our gross margins is actually delivering generational leads to our customers," linking future profitability to innovation velocity and product cycle execution.
INDUSTRY GLOSSARY
- Blackwell architecture: NVIDIA’s latest data center GPU platform focused on high-performance AI and accelerated computing workloads.
- NVLink: NVIDIA’s high-speed, low-latency interconnect technology enabling multi-GPU scalability within accelerated data centers.
- Spectrum X Ethernet: A network switching platform designed for large-scale, AI-optimized data centers, supporting the integration and scaling of AI workloads.
- Sovereign AI: Refers to proprietary, country-specific AI infrastructure built to serve national technological and data requirements.
- Agentic AI: AI systems capable of autonomous, multi-step reasoning and task execution, supporting next-generation applications such as code generation and enterprise automation.
- InferenceX: An industry benchmarking suite for AI inference performance, referenced in the call regarding demonstrated architectural leadership.
- Hugging Face: A widely-used open platform/repository for hosting AI and machine learning models, supported by NVIDIA’s CUDA.
- CUDA: NVIDIA’s parallel computing platform and API that enables accelerated computing across a broad range of GPUs.
- Rubin platform: NVIDIA’s newly introduced full-stack AI computing solution, offering next-generation CPUs, GPUs, switches, and networking for enterprise and hyperscale deployment.
- MoE models: Mixture-of-Experts neural networks that allocate AI tasks to specialized sub-models for efficiency and scalability.
- Amdahl’s Law: A principle in computer architecture indicating the limitations of parallelization and the need for high single-threaded CPU performance, mentioned by Jensen Huang as part of product design strategy.
Full Conference Call Transcript
Toshiya Hari: Good afternoon, everyone, and welcome to NVIDIA Corporation's conference call for 2026. With me today from NVIDIA Corporation are Jensen Huang, president and chief executive officer, and Colette Kress, executive vice president and chief financial officer. Our call is being webcast live on NVIDIA Corporation's website at investors.nvidia.com. The content of today's call is NVIDIA Corporation's property. It cannot be reproduced or transcribed without our prior written consent. During this call, we may make forward-looking statements based on current expectations. These are subject to a number of significant risks and uncertainties, and our actual results may differ materially.
For a discussion of factors that could affect our future financial results and business, please refer to the disclosure in today's earnings release, our most recent Forms 10-K and 10-Q, and the reports that we may file on Form 8-K with the Securities and Exchange Commission. All our statements are made as of today, 02/25/2026, based on information currently available to us. Except as required by law, we assume no obligation to update any such statements. During this call, we will discuss non-GAAP financial measures. You can find a reconciliation of these non-GAAP financial measures to GAAP financial measures in our CFO commentary, which is posted on our website. With that, let me turn the call over to Colette....
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"Dow Jones Futures Fall; Nvidia Slashes Gains Despite Strong Earnings, Guidance" (NVDA)
