Making Sense of Nvidia’s Guidance and the Market’s Reaction

Following up on our opening comments that glossed over Nvidia’s  (NVDA)  quarterly results and guidance, the company’s shares are down a few percentage points with the same happening for other chip companies, such as Broadcom  (AVGO) , Marvell  (MRVL) , and Advanced Micro Devices  (AMD) . Let’s dig into Nvidia’s results and earnings call comments plus a few other things, discuss why we remain bullish on our chip holdings and update our plan for them.

Nvidia’s January 2026 quarter

For its January quarter, Nvidia reported EPS of $1.62 on revenue of $68.13 billion, outstripping the consensus expectations of $1.54 and $66.13 billion. That record revenue soared 73.2% year over year and more than 19% quarter over quarter. As surprised no one, the star segment was Data Center, which posted a 75% year-over-year and 22% sequential increase to $62.3 billion, driven by the major platform shifts — accelerated computing and AI.

That made Data Center more than 91% of Nvidia’s revenue stream for the quarter and reinforces why the narrative surrounding AI and data center have influenced NVDA shares over the several quarters. 

As far as the other 8%+ of revenue goes, Gaming and AI PC revenue grew 47% year over year to $3.7 billion, driven by strong Blackwell demand. However, the segment was down 13% sequentially as channel inventory naturally moderated following a season of strong holiday demand. Professional Visualization revenue for the January quarter grew 159% year over year and 74% sequentially to $1.3 billion, while Automotive and Robotics clocked in at $604 million, up single digits year over year, reflecting continued adoption of Nvidia’s self-driving platforms.

The continued ramp and maturing of Blackwell production led margins to improve both sequentially and year over year. Cash flow from operating activities was $36.2 billion, up from $16.6 billion a year ago, during the quarter Nvidia repurchased $3.8 billion in shares. Exiting the January quarter, its cash and equivalents stood at $62.6 billion or net cash per share of ~$2.20.

Nvidia’s Guidance

For the current quarter, Nvidia guided its top line to $76.44 billion-$79.56 billion, considerably ahead of the expected $72.93 billion, and implies year-over-year gains of more than 70% as well as another sequential step up. Given the mix of revenue that skews more than heavily toward AI and data center, it’s fair to assume that will be the big driver of the top line — and that meshes with the upsized hyperscaler capex figures for this year, but also recent Nvidia wins, including the one with Meta  (META) . Gross margins are expected to hover around the 75% level, matching those for the January quarter.

Tracking the progress on that revenue guidance means we must continue to pay attention to monthly revenue figures and earnings from Taiwan Semiconductor  (TSM) , Foxconn, HP Enterprise  (HPE) , Dell  (DELL) , Super Micro Computer  (SMCI) , and others. After Thursday’s market close, Dell will be issuing it latest quarterly results and updated guidance. When Dell last reported in late November, its backlog stood at $18.4 billion and it expected to ship ~$9.4 billion of AI servers during its January quarter.

During Thursday evening's earnings call, we’ll be looking for an update on those figures as well as the color commentary from Dell about demand vs. supply levels. Given our position in Arista Networks  (ANET) , we will also be interested in Dell’s comments about demand from players outside of the hyperscalers, which are increasingly referenced as neoclouds, sovereigns, and enterprise customers.

Nvidia Beyond the Numbers

We all have come to recognize that comments from Nvidia CEO Jensen Huang are ones that many across Wall Street hang on. So, what did he say that stood out during last night’s earnings call:

"We have now seen the inflection of agentic AI and the usefulness of agents across the world in enterprises everywhere. You're seeing incredible compute demand because of it."

Jensen would go on to during the earnings call to explain that a bit further:

"If you look at the way we use computing in the past, however , the amount of computation demand for software in the past is a tiny fraction of what is necessary in the future. And AI is here. AI is not going to go back. AI is only going to – only get better from here. And so if you think about it and you said, okay, well, the world was investing about $300 billion to $400 billion a year in classical computing. And now AI is here and the amount of computation necessary is a thousand times higher than the way we used to do computing, the computing demand is just a lot higher."

All the more reason for us to continue to track AI adoption and usage in the enterprise, with customers and other institutions, being mindful to watch for any slowdown in the incremental growth rate for those figures.

The earnings call Q&A session also reaffirmed that Nvidia’s top-five customers are the hyperscalers, which account for ~50% of its total revenue. Not to nit-pick, but that suggests a figure of ~55% for Nvidia’s data center segment. 

Two things spring to mind – first, it tells us that Nvidia should benefit nicely as those hyperscalers ramp spending. That also helps explain why we are seeing demand for AI and data center chips from Broadcom and Marvell.

Second, Nvidia shared AI and data center demand from non-hyperscalers is also growing “very fast” as well. That backs recent comments from Arista Networks and also explains demand for AI chips from Broadcom, Marvell and some others. For us, it’s also reminder that for now, we are in a rising tide lifting multiple AI and data center suppliers.

That keeps us bullish in the face of the moves lower we are seeing Thursday in AVGO, MRVL and ANET shares.

Other Figures of Note and Dates to Watch for Nvidia

So why are Nvidia shares trading off given all of that good news? 

Some of that can be attributed to those pesky revenue guidance whisper figures near $80 billion for the current quarter. But we can also see that there was quite a bit of February 27 call options at the $200, $195, and more at $190 levels that are now out of money, with folks selling stock to reverse sold calls.

As we let that wash over the shares, we note strong support for NVDA shares at between $185-$186, which are the 50-day and 100-day moving averages. The next layer of support shows up near $175 or the 200-day moving average.

While we have ample room to maintain our One rating given our $250 price target, and yes, others on Wall Street are lifting their targets from somewhere near our target to $275-$300, let’s first see if NVDA holds support at the $185-$186 level before making any near-term buying decisions.

With Jensen Huang participating in a fireside chat at the Morgan Stanley TMT Conference on March 4, giving a keynote at GTC on March 16, and monthly revenue reports from TSM and Foxconn in between those two events, plus Dell’s earnings, we’ll have ample time and data we can use to revisit our NVDA price target.

As we collect those pieces of data and others, we’ll revisit our Two rating on AVGO, and potentially take note of some of our One ratings for ANET, MRVL and NVDA.

Nvidia and OpenAI, and a SuRo Reminder

Nvidia also shared that it continues “to work with OpenAI toward a partnership agreement and believe we are close.”

We interpret this to mean that OpenAI is close to closing its current funding round, one that could put its post-money valuation near $850 billion. We, of course, track this closely given our position in SuRo Capital  (SSSS) , and its investment in OpenAI. We’ve discussed with you many times that when SuRo reports its full December-quarter results, the net asset value (NAV) per share for its investment portfolio will reflect OpenAI’s post money valuation of $500 billion in October vs. the $300 million one at the close of Q3 2025 that was used for SuRo’s most recent NAV calculation.

Where we are going with this is that when OpenAI concludes its current round, whether that is in the current quarter or early in the next one, we will need to revisit SuRo’s NAV figure, and most likely our price target for SSSS. While we have a more than sizable position in SSSS shares, members could take small bites of that One-rated stock to build up their exposure. 

At the time of publication, TheStreet Pro Portfolio was long NVDA, AVGO, MRVL, META, SSSS and ANET.