Nvidia’s 85% Revenue Surge Highlights AI Demand, Yet China Remains Off‑Limits

Nvidia posts record quarter, but China stays out of the forecast

Nvidia announced $13.5 billion in revenue for the quarter ending March 2026, an 85 percent increase from the same period a year earlier. Net income rose to $5.4 billion, and earnings per share hit $7.85, both well above analysts’ consensus. The bulk of the growth came from the data‑center segment, which posted $10.2 billion in sales, up 112 percent YoY, as AI‑focused GPUs such as the H100 and the newly launched Hopper‑based models were snapped up by cloud providers and enterprise AI labs.

“Demand for AI infrastructure remains resilient despite broader market chatter about a bubble,” said CFO Colette Kress in the earnings call.

Market context

• AI spending: IDC projects worldwide AI‑related IT spend to reach $1.2 trillion by 2027, with GPUs accounting for roughly 30 percent of that budget.
• Competitive pressure: AMD’s MI300X and Intel’s Xe‑HPC are gaining traction, but Nvidia still commands an estimated 80 percent share of the high‑performance AI GPU market.
• Geopolitical risk: Nvidia’s guidance excludes China‑originated data‑center revenue. The company cited “regulatory uncertainty” and “supply‑chain constraints” as reasons for the exclusion. China represents an estimated $1.5 billion of potential sales in the current quarter, according to independent estimates.

Strategic implications

1. Revenue diversification: By keeping China out of its forecast, Nvidia signals a cautious approach to a market where export controls could abruptly curtail sales. The move protects guidance credibility but also leaves a sizable growth lever untapped.
2. CPU ambition: In parallel with its GPU dominance, Nvidia announced a roadmap to enter the CPU market, targeting a $200 billion addressable space that includes data‑center, edge, and client workloads. The company plans to launch its first ARM‑based server CPU by 2028, leveraging the same silicon‑design expertise that underpins its GPUs.
3. Capital allocation: Nvidia will reinvest $4 billion of the quarter’s cash flow into R&D, primarily for next‑gen Hopper successors and the nascent CPU line. Share buy‑backs are paused until the CPU program reaches production.
4. Investor sentiment: Despite the China exclusion, the stock rose 9 percent in after‑hours trading, reflecting confidence in the AI growth narrative. Analysts have upgraded the target price for the stock to an average of $1,200, up from $1,050 prior to the release.

What it means for the sector

• AI infrastructure providers can expect continued strong demand for high‑bandwidth GPUs, but they must hedge against supply‑chain shocks tied to U.S.–China tech restrictions.
• Competitors will need to accelerate their own AI‑chip roadmaps to capture market share that Nvidia may forgo in China.
• Enterprise buyers should anticipate higher pricing power for Nvidia’s next‑gen GPUs, given the limited alternative supply.
• Investors will watch Nvidia’s CPU rollout closely; success could diversify revenue streams and reduce reliance on a single product class.

For a deeper look at Nvidia’s financials, see the full earnings release on the Investor Relations page.