Original author: SoSoValue Research
NVIDIA released its Q1 fiscal year 2027 earnings; Q1 results and Q2 guidance largely met buy-side optimism, but share repurchases fell slightly below investor expectations. The stock dipped 1.3% after hours, as the market lacked short-term catalysts, though the medium- to long-term growth thesis remains clear.
Q1 Highlights: Steady and in line with optimistic expectations
NVIDIA's Q1 revenue reached $81.62 billion, representing an 85% year-over-year increase and a 20% sequential growth, broadly in line with buy-side optimistic expectations of $81–82 billion and above Bloomberg’s consensus estimate of $78.91 billion. Adjusted gross margin was 75%, up 14.2 percentage points year-over-year, in line with Bloomberg’s estimate of 75.1%. Adjusted net profit amounted to $45.55 billion, up 139% year-over-year, with adjusted EPS of $1.87, exceeding Bloomberg’s consensus estimate of $1.77.
This quarter, NVIDIA restructured its revenue segments into data centers and edge computing to better highlight its AI-driven business model, with orders from hyperscale customers being the primary growth driver in data centers.
- Data center revenue reached $75.2 billion, up 92% year-over-year and 21% quarter-over-quarter, exceeding Bloomberg's estimate of $73.3 billion.
- Hyperscale revenue (including public cloud and large internet companies) reached $37.9 billion, a 115% year-over-year increase, accounting for 50.4% of data center revenue, representing the fastest growth rate and serving as the most significant driver of NVIDIA's revenue.
- ACIE (AI Cloud, Industry, and Enterprise Applications) revenue reached $37.4 billion, a 74% year-over-year increase, accounting for 49.6%.
- Edge computing (Agent & physical AI, including PCs, gaming consoles, workstations, AI-RAN base stations, robots, and automobiles) revenue reached $6.4 billion, up 29% year-over-year and 10% quarter-over-quarter.
Earnings call: Vera CPU is the most critical incremental information
The phone call revealed that the Vera CPU opens a new $200 billion market for NVIDIA. Designed for agentic AI, the Vera CPU can be sold as a companion to Rubin GPUs or independently as a CPU, storage node, and security node. Total CPU revenue is expected to approach $20 billion this year, with mass production and shipments scheduled to begin in the third quarter, becoming a new growth driver for NVIDIA.
Management maintains its guidance of $1 trillion in revenue for the Blackwell + Rubin target period of 2025–2027, with no upward revision at this time; mass production on the Rubin platform begins in the second half of the year, ramping up in Q3 and accelerating in Q4, with significantly increased shipments expected in Q1 next year.
Additionally, China revenues remain excluded from guidance; the U.S. government has approved the shipment of H200 to Chinese customers, but it is uncertain whether China will permit imports.
Q2 guidance is largely in line with expectations.
- Q2 revenue guidance is $91 billion (±2%, excluding China revenue contribution); buyers' optimistic expectation is $91 billion, largely in line with expectations.
- Adjusted gross margin of 75% (±0.5%), broadly in line with expectations;
However, the buyback was slightly below expectations: the company added an $80 billion buyback authorization and increased its quarterly dividend to $0.25 per share (up from $0.01), slightly below some investors’ expectations for over $100 billion in additional buybacks.