First-quarter revenue rose 85% to $81.6bn ($78.9bn expected). That was driven by record revenue in the Data Centre segment rising 92% to $75.2bn, highlighting continued demand for AI hardware.
Underlying operating profit rose 147% to $53.8bn ($51.7bn expected), reflecting both strong volume growth and margin strength.
Free cash flow increased to $48.6bn, up 86%. Net cash, including leases, was $68.2bn at the end of the quarter. The Board has approved an additional $80bn onto the existing share buyback program and a dividend increase from $0.01 to $0.25 per share.
Second-quarter revenue is expected to be around $91.0bn, excluding China.
The shares are down 0.9% in after-hours trading.
Our view
These were blockbuster results, even by Nvidia’s increasingly absurd standards. Guidance was just as eye-catching, pointing to almost 100% revenue growth in the coming quarter, an unheard-of feat for a company of this size. We’ve said it before: analyst expectations still look too low across the forecast horizon.
The new reporting split gives investors a clearer view of demand. Hyperscale customers remain hugely important, but smaller AI cloud, industrial, enterprise and sovereign customers are now roughly half of Data Centre revenue and growing quickly, too. That supports our view that this is not just big tech building bigger models but a wider shift toward AI infrastructure.
Nvidia’s breadth remains underrated: a full data centre business spanning chips, software, networking and more. Networking revenue almost tripled year-on-year, and the move into CPUs with Vera adds another growth leg. Rivals can offer parts of the stack, but Nvidia’s AI-factory approach is hard to beat when customers are optimising the whole system, not just buying the cheapest chip.
Two questions persist: can the AI spending wave last, and will Nvidia stay dominant as AI shifts from training models to everyday inference? On the former, we think it can, given the breadth of use cases, customer spending plans and supply commitments already secured. On the latter, the lower-cost, higher-performance Vera Rubin arriving on schedule will be an important step in demonstrating its lead.
China remains uncertain, so we are excluding it from our models for now. Customers will also continue exploring in-house chips, and the market will keep asking whether AI spending can deliver returns. But demand still looks ahead of supply, and Nvidia is in the strongest position to turn that into revenue, profit and cash flow.
We would also flag a material shift in the returns profile. Nvidia is capital-light and generates an enormous amount of cash. We forecast free cash flow of over $200bn this financial year, with buybacks now a major source of returns. A record $20bn was returned over the first quarter, and the board approved an additional $80bn on top of the existing buyback programme – though nothing is guaranteed.
Our view remains that AI infrastructure demand, customer spending plans and cash generation support the case for earnings power staying stronger for longer. Nvidia might not get the plaudits it deserves in the earnings multiple, but raw earnings power eventually comes to the forefront, and we see upside from here.
Key areas to monitor remain AI sentiment, investment plans from major customers, and market share concerns as competition ramps - all valid risks.
Environmental, social and governance (ESG) risk
The semiconductor sector is medium-risk in terms of ESG. Overall, this risk is managed adequately in Europe and North America but has considerable room for improvement in the Asia-Pacific region. Its reliance on highly specialised workers means labour relations is one of the key risk drivers. Other risks worth monitoring include resource use, business ethics, product governance, and carbon emissions.
According to Sustainalytics, Nvidia’s management of material ESG risks is strong.
As the market leader in power-hungry GPU processors ,it’s recognised for paying close attention to the energy efficiency of its products. Business ethics concerns are addressed by Nvidia’s compliance committee, which comprises the CFO and several other senior managers. Additionally, a third-party hotline is available for both employees and third-party stakeholders to anonymously submit ethical concerns. Its human capital initiatives are also strong, which is reassuring given the talent gap in the industry. However, diversity amongst the workforce could still be improved.
The author owns shares in NVIDIA.
Nvidia key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember that yields are variable and not a reliable indicator of future income. Keep in mind that key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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