Good morning. Traders likely felt some relief on Wednesday evening following Nvidia’s strong Q4 earnings report.
The tech giant, which currently has the largest market cap in the world at about $4.7 trillion, reported record revenue for Q4 of $68.1 billion, up 20% from Q3 and 73% from a year ago. The company also reported record full-year fiscal 2026 revenue of $215.9 billion, up 65%. Nvidia’s data center business posted record quarterly revenue of $62.3 billion, up 22% from Q3 and 75% year over year.
Expectations were high going into the report, as investors looked for reassurance about the sustainability of hyperscaler spending on AI. Jensen Huang, founder and CEO of Nvidia, said in a statement that enterprise adoption of AI agents is “skyrocketing.”
For the first quarter of fiscal 2027, Nvidia guided to revenue of $78 billion. Total supply-related commitments rose from $50.3 billion at the end of the third quarter to $95.2 billion at the end of the fourth quarter, Fortune reported. In a statement, Nvidia said it has “strategically secured inventory and capacity to meet demand beyond the next several quarters.”
On the earnings call, Huang made what I think is an impactful comment: “In this new world of AI, compute equals revenues.” He also said, “Without investing in capacity today, without investing in compute, there cannot be revenue growth.” Computing power is essentially no longer viewed as a “cost center” but as a direct engine of revenue, according to Huang.
Architecture is incredibly important, as “it’s more than strategic now; it directly affects their earnings,” he said. “And choosing the right architecture—the one with the best performance per watt—is literally everything,” he added.
Nvidia’s major cloud/hyperscaler customers include Meta, Microsoft, Amazon Web Services, Alphabet, and Oracle, and CFO Colette Kress said on the call that large cloud service providers account for roughly 50% of the company’s data‑center revenue.
There is a fundamental platform shift from classical machine learning to generative AI, Kress said. “Strong evidence of ROI as hyperscalers upgrade massive traditional workloads to generative AI, including search, ad generation, and content recommender systems, is encouraging our largest customers to accelerate their capital spending,” she said.
For example, at Meta, advancements in their GEM model increased ad clicks on Facebook to 3.5 times their previous level and boosted conversions on Instagram by more than 1%, “translating into meaningful revenue growth,” she said.
However, Kress emphasized that Nvidia’s customer base is diverse and includes non-hyperscalers ranging from AI companies and large enterprises to supercomputing customers and sovereign buyers.
For finance chiefs, the message from Nvidia’s latest quarter is less about one company’s outsize gains— and more about a shifting rulebook for growth.
Sheryl Estrada
sheryl.estrada@fortune.com
This story was originally featured on Fortune.com
