Nvidia reported better-than-expected results for the January quarter on Wednesday. The chip giant also gave a revenue forecast for the current quarter that was higher than what analysts had predicted. The stock barely moved in after-hours trading. Investors have grown used to Nvidia comfortably beating estimates quarter after quarter. This was the 14th straight quarter of strong results. So even though the numbers were good, many on Wall Street seemed to expect something more.
The upbeat forecast helped push Nvidia shares up more than 3% in extended trading, Reuters reported. But the early excitement didn’t last. As the earnings call progressed, the gains faded. By late after-hours trading, around the time of the update, the stock had turned flat and was down about 1%.
The pullback was linked to investor worries about China and also to “whisper number” in the market, with some traders expecting an even stronger outlook than what the company delivered.
Nvidia bets big on AI as sales forecast beats expectations
The chipmaker said it expects stronger-than-expected revenue in the first quarter, as major tech companies continue pouring money into artificial intelligence.
Nvidia said it expects fiscal first-quarter sales of $78 billion, plus or minus 2%. Analysts had been expecting around $72.60 billion, according to LSEG data. For the quarter that ended in January, Nvidia reported revenue of $68.13 billion. That was higher than the $66.21 billion analysts had predicted. Adjusted profit came in at $1.62 per share, above estimates of $1.53.
Chief Financial Officer Colette Kress told analysts on a conference call that Nvidia expects sales growth to go beyond the $500 billion revenue pipeline it shared back in October for 2026. She did not give an exact timeline but said the company expects growth in every quarter of calendar 2026.
First-quarter forecast surprises the market
The optimism comes largely from big spending by the biggest technology companies. Cloud giants like Alphabet, Microsoft, Amazon and Meta Platforms have projected total capital spending of at least $630 billion in 2026. Most of that money is expected to go into building data centers and buying powerful processors to run AI systems.
“Our customers are racing to invest in AI compute — the factories powering the AI industrial revolution and their future growth,” CEO Jensen Huang said in a statement.
Analysts, according to Reuters, say the latest numbers suggest that fears of an AI slowdown have not shown up yet. Bob O’Donnell of TECHnalysis Research said it is also notable that Nvidia’s data center revenue is no longer coming from just a handful of hyperscalers, but is spreading on a large scale. That, he said, shows interest in AI computing continues to grow in different corners of the market.
Nvidia also addressed concerns about chip supply. Some investors had worried that production limits at contract manufacturer TSMC could slow its growth. The company said it has secured enough inventory and manufacturing capacity to meet demand beyond the next several quarters. However, it did note that supply shortages will affect its gaming business.
Competition is heating up
Nvidia’s dominance in AI chips is not going unchallenged. Rival AMD is preparing to launch a new flagship AI server later this year. The company has already secured deals with some of Nvidia’s top customers, including Meta.
Meanwhile, Google is emerging as a strong competitor with its in-house chips known as TPUs. Google has struck a deal to supply its chips to Anthropic, the company behind the Claude chatbot. Media reports also say Google is in talks to supply Meta.
Many big tech firms are now designing their own chips and deploying them in their data centers, as they try to secure more computing power and reduce reliance on outside suppliers. Ken Mahoney, CEO of Mahoney Asset Management, which owns Nvidia shares, said, “We want to finally see this report be enough to spark the tech sector and really get moving past resistance but it most likely will be a fight.”
He added, “This was a good beat and raise, the usual for Nvidia, but based on the reactions preliminarily, it seems a lot was baked in to the cake so far.”
No China revenue yet
Nvidia’s current-quarter forecast does not include any expected revenue from data center chip sales to China. Sales to China had been restricted because of US export controls. However, Nvidia said it received licenses this month from the US government to ship “small amounts” of its H200 chips to Chinese customers.
Jensen Huang said last month that he hopes China will allow the company to sell its powerful H200 AI chip in the country and that the license process is being finalised. Investors had been hoping for a stronger return of AI chip sales to China.
A shift in pay strategy
Nvidia also said it will now include stock-based compensation expenses in its non-GAAP financial measures. That move goes against the broader industry trend. The company explained the reason: “Stock-based compensation is a foundational component of Nvidia’s compensation program to attract and retain world-class talent.” With tech firms fiercely competing for top AI engineers and researchers, keeping talent has become just as important as selling chips.
Margins will tell a bigger story
One key number to watch is profit margins. Margins show how much money Nvidia keeps from every dollar of sales. In short, they reveal how strong the company’s position really is. Nvidia’s margins have been very strong in recent years, thanks to its lead in AI chips. In the nine months ending October 27, 2024, operating gross margins were above 76%. That slipped to 69.5% during the same period in 2025. In the latest quarter, margins improved again to 73.6%.
Management has said it wants to end fiscal 2026 with margins in the mid-70% range. Investors will be watching closely to see if that goal has been met and what the company expects going forward.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.