Key Takeaways
- Nvidia (NVDA) reported record Q4 FY2026 revenue of $68.1 billion, beating analyst estimates of $65.91 billion, driven by a 75% year-over-year surge in Data Center demand.
- The company is in advanced talks to finalize a strategic investment and partnership with OpenAI, though management cautioned there is no guarantee a deal will be signed.
- A massive $4.5 billion inventory write-off related to H20 chips dragged down FY2026 gross margins, highlighting the ongoing financial impact of shifting export regulations.
- The U.S. government has granted a limited license to ship H200 chips to specific China-based customers, but these shipments will be subject to a 25% U.S. import tariff.
- Nvidia signaled significantly higher capital expenditure for FY2027 after spending $6.1 billion in FY2026 to support the next phase of the AI infrastructure boom.
Record Earnings Driven by "King of Inference" Blackwell
Nvidia (NVDA) delivered a blockbuster Q4 FY2026 earnings report, posting revenue of $68.1 billion, a 73% increase year-over-year. The results were anchored by the Data Center division, which generated $62.3 billion in revenue as hyperscalers—accounting for over 50% of that segment—continued to aggressively build out AI infrastructure.
CEO Jensen Huang hailed the Grace Blackwell platform with NVLink as the "king of inference," noting that demand for the new architecture remains exceptionally strong. While Gaming revenue also saw growth driven by Blackwell, the company warned of supply constraints in the gaming segment for Q1 FY2027 and beyond.
Strategic OpenAI Partnership and Capex Surge
In a move that could reshape the AI landscape, Nvidia (NVDA) confirmed it is finalizing talks for an investment and partnership with OpenAI. Reports suggest the deal could involve a $30 billion stake, potentially replacing previous infrastructure-focused commitments with a direct equity investment. However, the company noted in an SEC filing that there is no assurance an agreement will be reached.
To fuel this continued expansion, Nvidia (NVDA) spent $6.1 billion in capital expenditures during FY2026. Management has already signaled that FY2027 capex will be even higher, as the company moves to diversify its supply chain beyond Asia into the U.S. and Latin America to mitigate geopolitical risks.
Regulatory Headwinds and the China Market
Despite the top-line success, Nvidia (NVDA) faced significant regulatory hurdles that impacted its bottom line. The company was hit with a $4.5 billion inventory charge tied to its H20 chips, resulting from overstock and purchase commitments that became difficult to fulfill under evolving export controls.
While the U.S. government granted a license in February 2026 allowing limited shipments of the H200 chip to specific customers in China, the victory is bittersweet. These shipments will face a 25% U.S. import tariff, and Nvidia (NVDA) noted it has yet to record revenue under this new licensing program. Market analysts remain cautious about the long-term viability of the China market given these escalating costs and political complexities.
FY2027 Outlook and Margin Recovery
Looking ahead, Nvidia (NVDA) provided a bullish Q1 FY2027 revenue outlook of $78.0 billion, plus or minus 2%. The company expects non-GAAP gross margins to hold steady at approximately 75.0%, even as it navigates higher input costs and the transition to new product cycles.
The company also announced it will begin including stock-based compensation in its non-GAAP measures starting in FY2027. With $96.6 billion in free cash flow generated in FY2026, Nvidia (NVDA) remains in a dominant financial position to lead the "next wave" of the global AI build-out.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.