FYI, after the release, I didn’t sell since I only have a few hundred shares. Also, I wasn’t entirely sure the price would drop, although there were some hints.

NVIDIA has just released its latest 10-K filing and 8-K report for Q1 FY26, and the numbers are staggering. But beyond the headline revenue growth, the details reveal a volatile path forward. Here’s what you need to know—from blockbuster results to potential red flags.

🚀 Record-Breaking Revenue, But at What Cost?

For the first quarter of FY26 (ended April 27, 2025), NVIDIA reported:

• Revenue: $44.1 billion, up 69% year-over-year.
• Data Center Revenue: $39.1 billion, up 73% from a year ago, driven by AI and large language model (LLM) adoption.
• Gaming Revenue: $3.8 billion, a record, fueled by the Blackwell GPU family.
• Gross Margin: A concerning 60.5% GAAP, far below previous years (78.4% in Q1 FY25).

Behind these numbers lies a massive $4.5 billion charge linked to excess inventory and purchase obligations for H20 products—designed primarily for China but stalled due to new U.S. export licensing rules. NVIDIA even admitted it was unable to ship an additional $2.5 billion of H20 products in Q1 alone.

📉 Guidance: Big Numbers, Big Uncertainties

NVIDIA’s Q2 FY26 guidance reflects a loss of $8 billion in revenue due to continued export controls on H20 products. Revenue is expected to hit $45 billion (+/- 2%), with gross margins around 72%. However:

• No formal full-year revenue or EPS guidance was provided—an indication of management’s cautious outlook amid regulatory, geopolitical, and competitive risks.
• Operating expenses are expected to grow mid-30% for FY26, driven by R&D and AI infrastructure investments, which could pressure profits if revenue growth falters.

⚠️ Red Flags That Investors Must Watch

🔴 $4.5 Billion Inventory Hit
This represents poor demand forecasting and highlights the vulnerability of NVIDIA’s reliance on the China market for its H20 products.

🔴 China Export Controls
New U.S. licensing requirements are throttling revenue and could prompt competitors to seize market share. Future export control risks loom large.

🔴 Customer Concentration
Nearly 50% of Data Center revenue comes from a few major cloud providers. Any pullback or switch in vendor relationships could create a multi-billion-dollar revenue gap.

🔴 Rising Costs and Competitive Pressures
NVIDIA faces increasing R&D expenses and competitive threats from open-source AI platforms, which could erode the premium pricing of its proprietary solutions.

🔴 Litigation Overhang
Ongoing derivative lawsuits allege misrepresentation of GPU demand, insider trading, and breaches of fiduciary duty. The financial and reputational risks remain unresolved.

🌐 Strategic Moves and AI Future Bets

Despite the challenges, NVIDIA is positioning itself as a leader in AI infrastructure, with aggressive investments in:

• Blackwell Ultra GPUs and AI factories with partners like AWS, Google Cloud, and Oracle.
• Expanding into new geographies (e.g., Abu Dhabi, Saudi Arabia) with large-scale AI infrastructure projects.
• Introducing innovative solutions like NVLink Fusion, DGX SuperPODs, and Stargate UAE.

CEO Jensen Huang’s bold vision suggests that AI is now an essential infrastructure, akin to electricity and the internet. NVIDIA’s Blackwell architecture and new partnerships may pave the way for long-term dominance, but only if it can navigate near-term disruptions.

💡 What Should Investors and Tech Enthusiasts Watch?

🔎 H20 Recovery or Write-Offs: Will NVIDIA manage to reallocate or salvage excess H20 inventory, or will further write-downs be necessary?
🔎 China Tensions: How will the company adapt to tightening U.S.–China tech regulations and potential retaliation?
🔎 Margins Recovery: Can NVIDIA claw back gross margins to the mid-70% range as promised?
🔎 AI Competition: How will the rise of open-source AI impact NVIDIA’s hardware-software dominance?

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🚨 Bottom Line: A Story of Brilliance with Caution 🚨

NVIDIA’s latest filings showcase phenomenal growth, but beneath the surface lies a minefield of risks. Investors and tech enthusiasts should temper excitement with caution, closely monitoring the evolving landscape of AI, export controls, and competitive dynamics.

Stay tuned for more updates and in-depth analysis as the AI revolution unfolds. 📊💥

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This is not financial advice 🙂