Nvidia Q4 FY26 Earnings Summary
On February 26, 2026, Nvidia (NVDA) reported its Q4 FY26 earnings, showcasing a remarkable performance that exceeded market expectations. The company's forward guidance for fiscal Q1 FY27 projected revenues of $78 billion, surpassing the analyst estimate of $73 billion. Notably, Nvidia's outlook does not include any revenue from Data Centre compute in China, addressing investor concerns regarding potential impacts from geopolitical tensions.
Key Financial Highlights
- Data Centre Revenue: Nvidia's Q4 data centre revenue reached $62.3 billion, exceeding the expected $60.36 billion, marking a 75% year-over-year increase driven by accelerated computing and AI.
- Gross Margin: The GAAP gross margin for Q4 was reported at 75.2%, slightly above the Street's estimate of 75.0% and an increase from 73.6% in Q3 FY26.
- Total Revenue: Q4 revenue was reported at $68.1 billion, comfortably above the forecast of $66 billion and up from $57 billion in Q3.
- Adjusted EPS: The adjusted earnings per share (EPS) came in at $1.62, beating expectations of $1.53.
Market Dynamics
Hyperscalers, which are large-scale cloud service providers, accounted for over 50% of Nvidia's data centre revenue, with the remaining revenue increasingly coming from neo-clouds. This diversification reduces reliance on major clients like Alphabet, Amazon, Meta, and Microsoft. CEO Jensen Huang emphasized that customers are seeing returns on their AI compute investments, which is expected to sustain elevated capital spending.
Market Reaction
Despite the strong earnings report and positive guidance, Nvidia's stock price experienced only a modest increase, indicating a complex market sentiment. Analysts noted that while hardware demand is robust, the software sector is facing challenges, leaving uncertainty about long-term profitability in the evolving AI landscape.
Federal Reserve Commentary
In addition to Nvidia's earnings, the Federal Reserve officials reiterated a cautious and patient approach to monetary policy. Richmond Fed President Thomas Barkin and Kansas City Fed President Jeffrey Schmid expressed optimism about cooling inflation while acknowledging ongoing challenges. St. Louis Fed President Alberto Musalem highlighted the balance between inflation and labor market risks, suggesting that any deterioration in hiring could prompt a reassessment of monetary policy.
Looking Ahead
Upcoming economic indicators include the US weekly jobless claims, with expectations of an increase to 215,000 filings. A significant deviation from this estimate could influence market sentiment and the US dollar's performance, particularly in light of recent Fed commentary on the labor market.