TLDRs
- Nvidia projects $78 billion Q1 revenue, exceeding market expectations.
- Data center demand and AI chip sales drive after-hours rally.
- Investors weigh China restrictions against strong AI infrastructure growth.
- CEO Huang’s upcoming GTC keynote could signal next demand wave.
Shares of Nvidia (NASDAQ: NVDA) climbed sharply in after-hours trading Wednesday following the company’s announcement of a first-quarter revenue forecast of roughly $78 billion.
The figure surpassed analyst expectations and highlighted the ongoing strength of AI-driven spending in data centers. During the regular session, the stock had already gained 1.4%, but the extended trading jump added nearly 4% to its valuation. Investors are now closely analyzing whether the AI momentum is accelerating or beginning to plateau.
Data Centers Fuel AI Hardware Demand
Nvidia’s latest earnings report revealed that fourth-quarter revenue reached $68.1 billion, with data center revenue alone hitting $62.3 billion. The company’s growth is fueled by enterprise customers ramping up AI training and inference infrastructure.
Additionally, Nvidia returned $41.1 billion to shareholders in fiscal 2026 through buybacks and dividends, reflecting a commitment to shareholder value even amid rapid expansion. Analysts note that memory supply tightness could provide additional tailwinds for chipmakers such as Micron if AI demand remains robust.
China Restrictions Pose Strategic Uncertainty
Despite the positive outlook, Nvidia flagged potential constraints on its growth from China, where its data center compute revenue is not yet factored into the projection. The company recently received U.S. licenses to ship only limited amounts of its H200 chips to Chinese customers.
While the upside scenario assumes hyperscalers continue purchasing at pace, investors remain wary that in-house chip development, margin pressures, or supply chain delays could temper growth. These factors make Nvidia’s extended gains in after-hours trading more cautious than they initially appear.
Non-GAAP Changes and Market Interpretation
Nvidia announced that it will begin including stock-based compensation in its non-GAAP earnings calculations. This adjustment could reshape how investors interpret margins and profitability across the AI chip sector, providing a new lens for comparison among hardware peers.
Non-GAAP figures often reveal the true beat-or-miss performance behind headline numbers, and this shift ensures more transparent, if slightly altered, financial reporting. Traders will be monitoring whether the after-hours pop persists when the regular session opens, as the thinner-volume market may not fully reflect broader investor sentiment.
GTC Event and Market Sentiment
Attention now turns to Nvidia’s GTC event in San Jose, scheduled for March 16–19, with CEO Jensen Huang delivering the keynote on March 16. Historically, GTC announcements offer fresh insights into product launches, sales forecasts, and AI adoption trends, often influencing investor confidence and market direction. While Nvidia’s current performance lifts its peers in AI infrastructure, the true test will be whether projected growth sustains momentum in coming quarters or simply resets expectations.
Nvidia’s Q1 outlook underscores the company’s dominant position in AI chipmaking, but careful scrutiny of regional licensing, product deployment, and evolving data center strategies will determine whether the after-hours rally signals sustained growth or a temporary surge in market enthusiasm.
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