(Bloomberg) — Nvidia Corp., the world’s most valuable company, delivered a sales forecast that drew a lukewarm reaction from investors, even as revenue from data center operators continued to surge.
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Sales in the three months ending in July will be about $91 billion, the company said in a statement late Wednesday. Though analysts estimated $87 billion on average, projections ranged as high as $96 billion, according to data compiled by Bloomberg.
Nvidia also dialed up its shareholder rewards, with the company increasing its quarterly dividend to 25 cents a share from a penny. And the chipmaker announced $80 billion in stock repurchases.
The outlook let down investors who have grown accustomed to Nvidia shattering expectations. The company also is facing the first major challenges to its dominance in AI computing, with a variety of chipmakers trying to carve out a piece of the business.
“Nvidia delivered another beat, but at this point that’s essentially priced in as it keeps beating quarter after quarter,” Emarketer analyst Jacob Bourne said in a note. “The lingering question is whether it can convince investors the AI build-out has durability into 2027 and 2028.”
Nvidia shares fell less than 1% in late trading after the results were released. They had gained 20% this year, a performance that outpaced the S&P 500 but lagged most major chip peers.
Nvidia is the top seller of so-called AI accelerators, chips used to develop artificial intelligence models. But it faces growing competition from across Silicon Valley. Advanced Micro Devices Inc. has rival processors, and Broadcom Inc. and Alphabet Inc.’s Google are attacking the market with their own technology.
For now, Nvidia has an enviable position — with Wall Street predicting that the company’s revenue will account for more than a third of the entire semiconductor sector’s sales this year. Chief Executive Officer Jensen Huang has stuck to his assertions that Nvidia will continue to deliver unprecedented growth as demand remains strong for the foreseeable future.
“The buildout of AI factories — the largest infrastructure expansion in human history — is accelerating at extraordinary speed,” he said in Wednesday’s statement.
Data center spending — the main source of Nvidia’s revenue — hasn’t shown signs of letting up. The major spenders in this area, a group known as hyperscalers, plan to shell out a combined total of roughly $725 billion on AI this year.
That hasn’t just buoyed sales of accelerators. General-purpose CPUs, or central processing units, also are in greater demand. That’s lifted results for Intel Corp. and AMD. Chip upstarts are getting a boost as well: Cerebras Systems Inc., which offers a novel product based on large pieces of silicon, had the year’s biggest initial public offering last week.
Santa Clara, California-based Nvidia doesn’t just sell accelerators. It offers a range of chips, as well as networking, software, AI models and even complete computer systems. That helps make its reach and capabilities unassailable, Nvidia management has argued. The company has said it has more orders than it can fill and is investing to add supply to meet that flood of demand.
In the three months ended April 26, Nvidia’s sales gained 85% to $81.6 billion. Analysts had estimated $79.2 billion on average. Profit, minus certain items, climbed to $1.87 a share. That beat a projection of $1.77.
Adjusted gross margin, the percentage of revenue remaining after deducting costs of production, was 75%.
Nvidia’s all-important data center unit generated revenue of $75.2 billion, compared with an estimate of $73.5 billion. Networking, part of the data center division, delivered $14.8 billion in sales, versus an estimate of $12.7 billion.
The company is on course to record revenue of more than $370 billion this year, according to estimates. By that measure, it will be roughly 22 times the size it was in fiscal 2021. Nvidia easily chalks up more sales in a quarter than its next three largest rivals combined.
Huang has just returned from a trip with President Donald Trump to China, the largest market for semiconductors overall. US export rules have stymied Nvidia’s growth in that country by restricting sales of AI accelerators on national security grounds.
The Trump administration has begun allowing older Nvidia products to be sold to Chinese customers. But Beijing, trying to cultivate local suppliers, has resisted that initiative. That’s left Nvidia mostly locked out of a market that it has said could generate $50 billion a year.
Meanwhile, Nvidia continues to branch out into new areas. It’s beginning to sell general-purpose processors and is offering chips tailored to the inference stage of artificial intelligence. That’s the point where models are already trained and beginning to handle real-world inputs.
(Updates with analyst’s comment in fifth paragraph.)
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