Nvidia Posts Record Quarter, Hikes Dividend 25x, but Market Rotation to Space and AI IPOs Dents the Stock

Nvidia posts 85% revenue surge to $81.6B and tripled net income, but stock falls 4% as market eyes SpaceX, OpenAI IPOs and China export restrictions hit.

When a company posts an 85% revenue surge to $81.6 billion and a net income that tripled to $58.3 billion, the typical response is a rally. Not last week. Nvidia's stock closed the week roughly 4% lower, with Friday alone shedding 1.66% of its value, settling at €185.54 in European trading — about 8% off its recent 52-week high near €201. The disconnect between financial performance and share price reflects a market that is already looking past the quarter toward a crowded pipeline of high-profile initial public offerings from SpaceX, OpenAI, and Anthropic, siphoning capital away from even the most profitable names in tech.

The numbers themselves were historic. Revenue climbed to $81.6 billion in the first quarter of fiscal 2027, fueled by the data center segment which generated $75.2 billion — a 92% jump from a year ago. Within that, networking revenue tripled. Non-GAAP gross margins held at 75%, while free cash flow hit $48.6 billion in just three months, turning the chipmaker into a veritable cash machine. To better reflect its evolving business, Nvidia is splitting its reporting structure into two segments: data center and edge computing.

That cash is being deployed aggressively. The board authorized an additional $80 billion in share repurchases, swelling an already large buyback program. The quarterly dividend is being raised to $0.25 per share — a 25-fold increase from the previous penny. The new payout kicks in at the end of June.

But beneath the headline strength, Nvidia faces headwinds. Chief Executive Jensen Huang acknowledged during the earnings call that US export restrictions have effectively handed the Chinese AI chip market to Huawei. China historically accounted for more than a fifth of data center revenue, and the current guidance for the second quarter — $91 billion in revenue, implying year-over-year growth of 95% — is built on the assumption of zero contribution from the Chinese data center market.

To offset that loss, Nvidia is doubling down on so-called agentic AI and a new CPU platform called Vera. The company estimates the addressable market for these products at $200 billion and is targeting $20 billion in CPU revenue by 2026. Analysts at GF Securities expect the Vera chip to outperform x86 architectures from Intel and AMD by a factor of 1.5 in compute performance and to achieve four times the rack density.

On the supply side, the parabolic demand for Nvidia's Blackwell-300 systems continues to outstrip supply, and the upcoming Vera-Rubin platform — due to begin production in the third quarter of 2026 — is constrained by a global shortage of specialty memory. CFO Colette Kress said Nvidia secured its RAM supply "a long time ago," giving it an edge over competitors scrambling for components. Meanwhile, the company has begun shipping Dynamo 1.0, software that accelerates AI workloads on existing chips.

State-funded AI projects are becoming an important growth vector. According to a study by the CNAS, Nvidia supplies GPUs for 52% of all government-backed AI infrastructure projects across 40 countries, including Japan, Poland, and Abu Dhabi. In Germany, the company is partnering with Deutsche Telekom to build an industrial AI cloud that could scale to 10,000 GPUs.

Wall Street remains broadly bullish. Baird raised its price target to $500 — the highest among major banks — citing market share gains in inference and the potential of the Vera-Rubin platform. Bank of America set a target of $350, while Morningstar pegs fair value at $280, suggesting the stock is undervalued at current levels. The upcoming launch of Vera-Rubin in the fall will test Nvidia's ability to scale production smoothly. If it succeeds, the operational momentum could drive shares back toward all-time highs.