NVDA Q2 Guide of $91B Excludes China Revenue, Validating Hyperscaler Capex Cycle
With $75.2B in data-center revenue and ARM up 15% in sympathy, the AI infrastructure spend thesis is intact. Yet the S&P 500 ex-Magnificent Seven remains flat YTD, sharpening concentration risk for SPY holders.
RKey facts
- NVDA Q1 revenue $81.6B, data-center revenue $75.2B, GAAP net income $58.3B
- Q2 guidanceCompany-issued forecasts of future financial performance. $91B excludes all China data center revenue
- NVDA +4 largest US stocks now drive 40% of S&P 500 returns YTD
- ARM surged 15% on Huang deal announcement; trades at 100x forward P/E
- S&P 500 breadth flat YTD excluding Magnificent Seven names
What's happening
Nvidia's latest earnings landed cleanly in the face of macro turbulence, with management guiding $91 billion for the next quarter in a move that simply swept aside months of skepticism from sell-side bears. Over the previous three weeks, every major hyperscaler had announced AI capex increases; the worry was that NVDA's books would not reflect that spending. Thursday's guidanceCompany-issued forecasts of future financial performance. obliterated that narrative.
The headline numbers were staggering: $81.6 billion in record Q1 revenue, $75.2 billion in data-center revenue, and $58.3 billion in GAAP net income. What made the call more powerful was Jensen Huang's implicit acknowledgment that the $91B forward guide excludes any contribution from Chinese data center customers entirely, yet the company still felt confident enough to post that target. That admission underscores just how strong hyperscaler demand remains across every region save mainland China.
The broader market implication is that AI infrastructure spending is not peaking, nor are capex cycles cooling. Semiconductor breadth was strong on the news; AMD and ARM both rallied sharply. This ripples across the entire supply chain, foundries like TSMC, chip architects like ARM, and equipment makers all stand to benefit. Yet valuation risk persists: NVDA trades at 25x forward earnings even after the run, while ARM sits at 100x, creating asymmetric repricing risk if hyperscaler spending modulates or if geopolitical tensions worsen China access.
Some bears remain unconvinced. They argue that the stock has become a proxy for the entire AI trade, making it extremely crowded; a 1-2% pullback in capex growth or a hiccup in data center utilization could trigger a violent correction. Market breadth data also shows that without the Magnificent Seven, the broader S&P 500 has flatlined, a warning that concentration risk is at historic extremes.
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