Nvidia delivers record revenue but stock falls on AI growth concerns

Shares of Nvidia NVDA fell in extended trading on Wednesday after the artificial intelligence chipmaker issued a quarterly revenue forecast that, while above Wall Street expectations, failed to fully satisfy investors accustomed to the company significantly outperforming estimates.

Nvidia reported record first-quarter fiscal 2027 revenue of $81.6 billion, up 85% year over year and 20% sequentially.

The company posted GAAP diluted earnings per share of $2.39 and non-GAAP diluted earnings per share of $1.87.

The company’s data center business continued to drive results, with revenue in the segment reaching a record $75.2 billion, up 92% from a year earlier.

Nvidia also announced an additional $80 billion share repurchase authorization and raised its quarterly dividend to $0.25 per share.

Despite the strong quarterly performance, Nvidia shares dropped 0.27% after the release.

Investors appeared focused on the company’s second-quarter outlook and intensifying competition across the AI semiconductor industry.

Data center demand fuels record quarter

Nvidia forecast second-quarter revenue of $91 billion, plus or minus 2%, above Wall Street estimates near $87 billion.

However, some analyst projections had reached as high as $96 billion, tempering investor enthusiasm.

The company said it was not assuming any data center compute revenue from China in its second-quarter outlook.

Chief Executive Officer Jensen Huang attributed the company’s growth to accelerating AI infrastructure spending and strong demand for next-generation AI systems.

Nvidia said record data center revenue was driven by the rapid buildout of AI factories and demand tied to agentic artificial intelligence applications.

The company also highlighted improving profitability, citing rising sales of its Blackwell AI chips as a contributor to stronger margins compared with the prior quarter.

Spending on AI infrastructure remains elevated across the technology industry.

Major hyperscalers, including Alphabet, Amazon, and Microsoft, are expected to spend more than $700 billion on AI this year, according to the report. 

Nvidia expands AI ecosystem

Nvidia continued broadening its AI portfolio during the quarter, unveiling the Vera Rubin platform, which includes the Vera CPU and BlueField-4 STX products designed for agentic AI and AI factory deployments.

The company also entered production with Dynamo 1.0, software intended to accelerate generative and agentic AI inference workloads on Blackwell GPUs.

Nvidia expanded partnerships across cloud computing, optics, automotive, and semiconductor ecosystems.

Collaborations announced during the quarter included agreements involving Google Cloud, Marvell Technology, Coherent, Corning, Lumentum, Hyundai, Kia, and Uber.

The company also reported continued momentum in its Edge Computing business, where revenue rose 29% year over year to $6.4 billion.

Competition pressures AI dominance

Although Nvidia remains the dominant supplier of AI accelerators used to train artificial intelligence models, competition in the industry continues to intensify.

Advanced Micro Devices, Intel, Broadcom, and Alphabet’s Google are all developing competing AI chips and inference technologies.

Much of the competition is focused on AI inferencing, the process where AI systems respond to user requests, which many companies view as a larger long-term market opportunity than AI training.

Nvidia has responded by broadening its product lineup beyond accelerators to include networking, software, CPUs, AI models, and full computing systems.

The company has also continued investing heavily in expanding supply capacity, arguing that customer demand remains stronger than available production.