Nvidia again posted a powerful quarter and raised its outlook for the year ahead, banking on continued heavy spending by technology customers for its AI-focused processors. Yet the market reaction was muted - shares gained roughly 1% in premarket trading after the release - reflecting a view that the company’s bar for delivery has become unusually high.
On a reported basis, Nvidia’s total revenue for the fiscal fourth quarter climbed 73% year over year to $68 billion. The company’s data-center revenue was the primary driver, rising 75% to $62 billion. Within data center, the compute business expanded 58%, while networking jumped 263% - the largest sequential dollar increase Nvidia has recorded.
UBS strategists led by Ulrike Hoffmann-Burchardi highlighted the scale of the surge, noting in their write-up that Nvidia’s data-center revenue has grown almost 13-fold since the introduction of ChatGPT. They also pointed to the company’s guidance for fiscal 2027 revenue of $78 billion, a figure that came in nearly 7% above consensus and prompted the strategists to anticipate mid-single-digit upgrades to Street estimates.
The UBS team distilled three central takeaways from the report and guidance. First, Nvidia now expects to exceed its earlier $500 billion revenue framework for the Blackwell and Vera Rubin platforms, underpinned by robust supply commitments and purchase obligations that reached $95 billion.
Second, management described demand dynamics as an "Agentic AI inflection," saying enterprises are adopting agentic solutions that increase token usage and therefore drive greater compute requirements. UBS summarized the effect succinctly: "Simply put, agentic AI generates significantly more demand for tokens, which in turn drives substantially more demand for compute capacity." The company also expressed confidence that these agentic implementations are profitable.
Third, Nvidia reinforced its competitive positioning, emphasizing the strategic value of a systems-approach that spans networking, compute and CUDA compatibility.
Despite the accelerating pace of earnings growth, the strategists observed that Nvidia shares have "de-rated materially over the past six months." Investor concerns include the potential for circular financing, uncertain returns on AI-related investments, and hyperscaler capital expenditures that are nearing 100% of operating cash flow - all factors that could weigh on valuation. UBS suggested that such worries are unlikely to dissipate quickly and that the stock’s valuation could continue to trend lower from current levels around 24x forward earnings.
Even so, UBS retained a constructive long-term stance. The strategists forecast an earnings compound annual growth rate in excess of 30% over coming years and reiterated confidence in Nvidia’s ability to capture expanding hyperscaler spending. They emphasized the appeal of Nvidia’s full-stack solution - from networking to compute to the CUDA software stack - for enterprise and sovereign customers.
Nvidia noted one additional point on China: its current-quarter outlook excludes any expected revenue from data-center chip sales to China. The company did report receiving U.S. government licenses this month to ship "small amounts" of H200 chips to Chinese customers, following previous export restrictions, but said that potential China-related sales were not included in its forward-looking revenue guide.
In sum, the quarter combined record-level data-center growth and bullish forward guidance with persistent market caution. The results reinforced Nvidia’s leading position in AI infrastructure, while questions about valuation and the conversion of hyperscaler capex into durable returns continue to temper investor enthusiasm.