Nvidia (NVDA) posted another quarter of outstanding growth in Q1 fiscal 2026, with results powered by unrelenting demand for AI infrastructure and accelerated computing platforms. Revenue surged to $44.06 billion, marking a 69% year-over-year increase and a 12% sequential gain, underscoring Nvidia’s dominant role in the AI hardware space. However, profitability was tempered by a significant inventory-related charge, which weighed on margins. Gross margin declined sharply to 60.5%, down from 78.4% a year ago and 73.0% last quarter, due to a $4.5 billion charge tied to H20 excess inventory and purchase obligations.

Despite the margin hit, Nvidia maintained strong operating leverage. Operating income rose 28% YoY to $21.64 billion, though it dipped 10% sequentially, while net income climbed 26% YoY to $18.78 billion, also down 15% from the previous quarter. Diluted EPS increased 27% YoY to $0.76, but fell 15% QoQ, tracking the income decline.

The Compute & Networking segment remained the key growth engine, fueled by explosive adoption of Nvidia’s Blackwell platform across data centers, large language models, recommendation systems, and generative AI. Data Center compute revenue rose 76% YoY, while networking revenue jumped 56%, driven by NVLink and increased use of Ethernet among hyperscalers and internet companies. Segment profits were partially offset by the aforementioned inventory charge. In the Graphics segment, growth was also solid, led by new Blackwell architecture products.

Geographically, 47% of revenue came from the U.S. ($20.74 billion), with notable contributions from Singapore ($9.02 billion)—primarily related to U.S. customer invoicing—Taiwan ($7.16 billion), and China including Hong Kong ($5.52 billion). Overall, 53% of revenue originated outside the U.S.. Nvidia also reported high customer concentration, with two major Compute & Networking clients accounting for 16% and 14% of total revenue.

Management emphasized the continued expansion of AI workloads and infrastructure investment across cloud and enterprise markets, pointing to broadening adoption of the Blackwell GPU platform beyond major cloud service providers. While no numerical forward guidance was provided, commentary suggests robust momentum in AI and accelerated computing will remain a strategic priority.

In summary, Nvidia’s Q1 results underscore its central position in the AI-driven computing shift. While gross margin compression from inventory charges posed a near-term headwind, the company’s top-line growth and expanding AI footprint signal sustained long-term opportunity.