What AI hype? Nvidia achieves an unprecedented $68 billion in quarterly revenue and projects $78 billion, with Jensen Huang highlighting the rapid surge in agent adoption

Nvidia's CEO Addresses Investor Concerns on AI Spending

Jensen Huang, the head of Nvidia, responded confidently to investor worries about the potential excesses in AI investment. When questioned during the chip giant's earnings call, Huang emphasized that in today's AI-driven economy, computing power and revenue are closely linked. He explained that cloud providers must have the ability to generate AI tokens—small segments of chatbot output—to achieve meaningful growth.

Cloud Providers and Capital Expenditures

Analysts raised questions about whether major cloud companies, whose annual capital spending is approaching $700 billion, can sustain their investment pace. Huang dismissed these concerns, stating, "I am confident their cash flow will continue to increase. The reason is straightforward." He pointed to the rapid adoption of agentic AI across industries, which is fueling unprecedented demand for computing resources. In this environment, computing capacity directly translates to revenue, as generating tokens is essential for growth.

AI Investments Fuel Revenue Growth

Huang noted that the massive capital expenditures flowing into AI ultimately drive growth and revenue for cloud providers. Nvidia's recent financial results offered AI investors a glimpse of a swift recovery, with fourth-quarter and full-year fiscal 2026 revenues reaching a record $68.1 billion—surpassing expectations by about $3 billion. This marked a 20% increase over the previous quarter and an impressive 73% rise compared to the prior year.

Strong Outlook and Supply Commitments

The company projected first-quarter fiscal 2027 revenues of $78 billion. Nvidia's supply-related commitments jumped from $50.3 billion at the end of Q3 to $95.2 billion at the end of Q4. Nvidia stated it has proactively secured inventory and capacity to meet demand for several upcoming quarters.

Margin Performance and Investor Reactions

Investors closely monitored Nvidia's gross margins, looking for any signs of decline. Previous guidance suggested a 74.8% GAAP gross margin, indicating partial recovery. Huang and CFO Colette Kress aim to maintain margins in the mid-70s for fiscal 2027. On earnings day, Nvidia exceeded expectations: GAAP gross margin rose to 75%, up from 73.4% in Q3, and non-GAAP gross margin reached 75.2%. The company's stock initially climbed over 2% in after-hours trading before settling back.

Net Income and Earnings Highlights

Nvidia's GAAP net income increased 35% quarter-over-quarter and soared 94% year-over-year to approximately $43 billion. Diluted earnings per share rose 35% to $1.76 for the quarter, nearly doubling compared to fiscal 2025. Net income received a boost from Nvidia's investment in Intel stock, while non-GAAP income (excluding Intel gains) totaled $39.6 billion.

AI Investment Landscape

Nvidia's earnings come amid widespread concerns about over-investment in AI, as hyperscale companies like Amazon, Meta, Microsoft, Oracle, and Alphabet compete fiercely in the AI space. A recent Moody’s report highlighted $662 billion in future data center lease commitments that remain off these companies’ balance sheets.

Industry Trends and Nvidia's Role

Huang remarked, "Computing demand is growing exponentially. Enterprise adoption of AI agents is accelerating rapidly. Our customers are investing heavily in AI compute—the backbone of the AI industrial revolution and their future expansion." Nvidia benefits from this surge in capital spending, as its high-performance chips are in high demand.

Full-Year Financial Performance

For the full fiscal year, Nvidia's revenue reached $215.9 billion, a 65% increase over the previous year. GAAP operating income was $130.4 billion, and net income totaled $120.1 billion. In fiscal 2025, Nvidia reported $130.5 billion in revenue, more than doubling the prior year's $60.9 billion. Net income for that year was $72.9 billion, and operating income more than doubled to $81.5 billion. Data center revenue for fiscal 2026 grew to $197.3 billion, up from $115.2 billion the year before.

• Q1 2026: $44.1 billion in revenue (details)
• Q2 2026: $46.7 billion (details)
• Q3 2026: $57 billion (details)
• Q4 2026: $68.1 billion (details)

Addressing AI Market Concerns

Last quarter, Huang sought to dispel worries about an overheated AI market during the Q3 call with analysts. He stated, "There's been a lot of speculation about an AI bubble. From our perspective, we see something entirely different." Huang described three major shifts in the industry: moving from CPUs to GPU-based computing, transitioning from traditional machine learning to generative AI, and evolving from generative AI to agentic AI. Each phase has justified substantial investment, with the first two funded through cost savings and revenue growth, while agentic AI represents a new layer requiring further investment.

Future Outlook

CFO Kress previously indicated that Nvidia expects $500 billion in revenue from its Blackwell and Rubin products between the start of 2025 and the end of 2026. She also projected that annual AI infrastructure investment could reach $3 trillion to $4 trillion by 2029 or 2030.

This article was first published on Fortune.com.