Nvidia Earnings: Beyond Export Restrictions

Nvidia's Q1 Earnings: Beyond Export Controls

Nvidia is scheduled to announce its first quarter fiscal year 2026 earnings after the market closes on Wednesday, with the quarter concluding on April 27th.

While the impact of recent U.S. chip export regulations on Nvidia’s international operations and future projections is a key concern for many industry observers, some analysts believe a different aspect of the report deserves greater attention.

Focus on the GB200 NVL72 Hardware

Kevin Cook, a senior equity strategist at Zacks Investment Research with a decade of experience tracking Nvidia, suggests that the company’s deployment of the new GB200 NVL72 hardware is a more crucial area for investors to consider.

This GB200 NVL72 system, an exascale computer housed within a single rack, began shipping in February. Each unit incorporates 72 GPUs and carries a price tag of approximately $3 million.

Despite robust demand and high expectations at the start of the year, the uncertainties surrounding DeepSeek in late January led several analysts to reduce their delivery forecasts for this particular unit by half, according to Cook.

He further noted that, as this is the initial quarter for shipments, a definitive assessment of performance is currently unavailable.

Delivery Numbers and Enterprise Demand

“A projection of 10,000 units delivered in Q2 from Jensen [Huang] would be met with significant approval from the market,” Cook stated. “This represents a substantial, yet achievable, figure – 10,000 units equates to $30 billion based on a $3 million product cost. I anticipate actual deliveries will be under 5,000 units.”

These results will begin to reveal the level of interest from businesses in the newest AI technology. The question is whether companies will consistently upgrade their AI hardware with each new release, mirroring consumer behavior with products like the latest iPhone.

Cook expressed uncertainty regarding whether enterprises will embrace this upgrade cycle, acknowledging that such a trend could significantly influence Nvidia’s future performance.

Long-Term Valuation and Resilience

Cook anticipates that Nvidia’s stock will experience immediate reactions based on statements concerning U.S. export controls. However, he believes the long-term valuation and stock price will be more heavily influenced by the demand for the GB200 NVL72.

He highlighted Nvidia’s demonstrated ability to rebound from short-term market volatility.

“The stock experienced a rapid decline and has since recovered,” Cook observed, referring to Nvidia’s performance following the announcement of chip export restrictions. “This resilience is unique to Nvidia. While many companies face setbacks, Nvidia possesses a significant competitive advantage and the ability to withstand such challenges. It’s noteworthy that concerns regarding potential sales restrictions in China have been largely dismissed by the market.”

Continued Demand and Future Prospects

Even with potential tightening or continuation of chip export restrictions to China, Cook contends that Nvidia is not facing a shortage of customers in other regions.

The company currently serves all major hyperscalers and is expected to maintain strong demand for its AI chips. He also pointed to recent announcements regarding Stargate’s new project in the Middle East as a likely positive development for Nvidia.

Key Takeaway: GB200 NVL72 Deliveries

Ultimately, Cook’s outlook hinges on the GB200 NVL72 unit deliveries.

“Provided we receive confirmation of steady or exceptional delivery expectations, any revenue fluctuations in this quarter will likely be secondary, as the company appears well-positioned for continued success throughout the remainder of the year,” Cook concluded.