Nvidia Q1 Results Solid, Vera CPU Drives Future Growth
- Key Takeaways: Nvidia's FY2027 Q1 results and Q2 guidance met optimistic expectations, with the data center business serving as the core growth driver. The Vera CPU opens a new market, but slightly lower buybacks led to a minor post-market decline. The medium-to-long-term growth thesis remains clear.
- Key Elements:
- Q1 revenue reached $81.62 billion, up 85% year-over-year, slightly exceeding buyer expectations of $81-82 billion. Net profit reached $45.55 billion, up 139% year-over-year.
- Data center revenue was $75.2 billion, up 92% year-over-year, with revenue from hyperscale customers growing 115% year-over-year, accounting for 50.4% of data center revenue, making it the most critical growth driver.
- The Vera CPU is designed for Agentic AI. It serves as both a companion chip for the Rubin GPU and a standalone product. Total CPU revenue is expected to approach $20 billion this year, with mass production shipments starting in Q3, opening a new market.
- Management maintained the 2025-2027 Blackwell+Rubin revenue target of $1 trillion without an upward revision. The Rubin platform will enter mass production in H2, with shipments increasing significantly in Q1 next year.
- Q2 revenue guidance is $91 billion, with gross margins of 75% largely meeting expectations. However, the new $80 billion in share buybacks was slightly below some investor expectations, causing the stock to fall 1.3% in after-hours trading.
Original Author: SoSoValue Research
NVIDIA released its Q1 FY2027 earnings results. The Q1 performance and Q2 guidance were largely in line with bullish buy-side expectations, though share buybacks slightly fell short of investor expectations. The stock edged down 1.3% in after-hours trading, reflecting a lack of short-term catalysts, though the medium-to-long-term growth thesis remains intact.
Q1 Earnings Highlights: Solid and In Line with Bullish Expectations
NVIDIA reported Q1 revenue of $81.62 billion, up 85% year-over-year and 20% quarter-over-quarter, generally within the buy-side's optimistic range of $81-82 billion and above the Bloomberg consensus of $78.91 billion. Adjusted gross margin was 75%, up 14.2 percentage points year-over-year, in line with the Bloomberg estimate of 75.1%. Adjusted net income reached $45.55 billion, up 139% year-over-year, with adjusted EPS of $1.87, exceeding the Bloomberg estimate of $1.77.
This quarter, NVIDIA reclassified its revenue structure into Data Center and Edge Computing to better reflect its AI-driven business model. Orders from hyperscale customers within the Data Center segment remain the primary growth driver:
- Data Center revenue was $75.2 billion, up 92% YoY and 21% QoQ, above the Bloomberg estimate of $73.33 billion.
- Hyperscale (including public cloud and large internet companies) revenue reached $37.9 billion, up 115% YoY, accounting for 50.4% of Data Center revenue. This is the fastest-growing segment and the most important driver of NVIDIA's revenue.
- ACIE (AI Cloud, Enterprise, and Industry Applications) revenue was $37.4 billion, up 74% YoY, representing 49.6% of Data Center revenue.
- Edge Computing (Agentic & Physical AI, including PCs, gaming consoles, workstations, AI-RAN base stations, robotics, and automotive) revenue was $6.4 billion, up 29% YoY and 10% QoQ.
Earnings Call: Vera CPU is the Most Significant Incremental Update
During the call, management disclosed that the Vera CPU opens up a new $200 billion market opportunity for NVIDIA. Designed for Agentic AI, the Vera CPU can be sold either as a companion to the Rubin GPU or as a standalone CPU, storage node, and security node. Total CPU revenue is expected to approach $20 billion this year, with mass production and shipments slated to begin in the third quarter, representing a new growth vector for NVIDIA's business.
Management maintained its guidance for total revenue of $1 trillion from Blackwell + Rubin platforms between 2025 and 2027, without an upward revision for now. The Rubin platform is expected to begin mass production in the second half of the year, ramp up in Q3, accelerate in Q4, and see significantly higher shipments by Q1 next year.
Additionally, China revenue continues to be excluded from guidance. The U.S. government has approved H200 shipments to Chinese customers, but it remains uncertain whether China will permit imports.
Q2 Guidance Broadly Meets Expectations
- Q2 revenue guidance is $91 billion (±2%, excluding China revenue contribution), in line with the buy-side's optimistic estimate of $91 billion.
- Adjusted gross margin is guided at 75% (±0.5%), generally in line with expectations.
However, share buybacks came in slightly below expectations: The company authorized an additional $80 billion for share repurchases and raised its quarterly dividend to $0.25 per share (from $0.01 previously), which was slightly below some investors' expectations of $100 billion or more in new buyback authorizations.
