NVIDIA (NVDA) Rockets on AI Demand and Blackwell Ramp, Price Target Hits $181
$44.06B Q1 revenue, 262% YoY DC surge, and sovereign AI deals expand NVDA’s reach. Despite H20 hit, forward EPS lifts. Is Omniverse the key to $1T more? | That's TradingNEWS
NVIDIA (NASDAQ:NVDA) Commands AI, Simulation, and Sovereign Growth in $44B Quarter
Blackwell, Sovereign AI, and Simulation Lock-In Shape the Future of NASDAQ:NVDA
NVIDIA's Data Center Juggernaut Surges to $39B: Hyperscaler Deployments Drive 73% YoY Growth
NVIDIA (NASDAQ:NVDA) delivered an astonishing $44.06 billion in Q1 FY2026 revenue, up 69.2% YoY, with $39 billion coming from data centers alone—a 73% YoY spike. Key drivers include rapid adoption of the Blackwell architecture, now contributing 70% of compute revenue. Microsoft and OpenAI reportedly deploy nearly 1,000 NVL72 racks weekly, totaling 72,000 Blackwell GPUs per week. GB200 systems are now widely available, reflecting hyperscalers’ massive infrastructure ramp.
Export Controls Trigger $4.5B Hit—but NVIDIA Still Beats Across the Board
The April H20 chip ban from U.S. regulators forced NVIDIA to write down $4.5 billion in inventory and purchase obligations, crushing gross margin to 61% (would’ve been 71.3% excluding the charge). Despite this, the company beat EPS expectations by 8.02%, showing unmatched resilience. H20 orders worth $2.5 billion were blocked, but revenue diversification and accelerated Blackwell adoption kept earnings intact.
Sovereign AI Supercycle: Saudi, UAE, Germany, and Taiwan Fuel Diversification
A rising pillar of growth is Sovereign AI, with Germany launching a European industrial AI cloud built on 10,000 NVIDIA GPUs. Saudi Arabia and UAE have committed to large-scale AI factories, while Sweden and Taiwan expand NVIDIA partnerships. This pivot away from hyperscaler concentration reduces cyclicality and anchors NVIDIA in state-backed infrastructure growth. The strategic partnership with Deutsche Telekom exemplifies the intersection of national security and compute sovereignty.
Simulation-as-Infrastructure: Omniverse Becomes the OS for AI Grounding
Omniverse—built on the OpenUSD format—is NVIDIA’s overlooked flywheel. It combines physics simulation with GPU acceleration, enabling AI models to learn from photorealistic, physics-faithful virtual worlds. Partners like Siemens and Hexagon are integrating Omniverse into industrial workflows, while Isaac Sim powers millions of robotic cycles for clients like Husqvarna and Yum! Brands. The digital twin ecosystem is sticky, CUDA-based, and compounding. No rival matches its scale or interoperability.
CUDA Lock-In and Ecosystem Gravity Create Long-Term Moat
NVIDIA’s hardware/software integration is unmatched. The CUDA software layer, Blackwell GPU architecture, DGX Cloud infrastructure, and Omniverse simulation layer form a tightly coupled stack. Blueprints for factories, wind farms, and semiconductor fabs are prebuilt, reinforcing developer lock-in. AMD lacks industrial simulation. Microsoft lacks proprietary silicon. NVIDIA owns both.
Networking and Enterprise AI: The Hidden $13B Engine
NVLink exceeded $1 billion in Q1 shipments, while Spectrum-X is now annualizing over $8 billion in scale-out Ethernet revenue. Enterprise AI is emerging with DGX Station and RTX Pro deployments in financial, industrial, and retail sectors. Isaac GR00T and on-prem agentic AI form a rising TAM as enterprise workflows shift to local LLM orchestration.
Gaming Revenue Hits Record $3.8B, Boosted by RTX 5060 Adoption
NVIDIA’s gaming division grew 42% YoY to $3.8 billion, driven by strong GeForce RTX 5060 and 5060 Ti demand. This reinforces consumer loyalty and ensures continued revenue from the legacy GPU business. Combined with pro visualization and mobile AI endpoints, gaming anchors consumer exposure without distracting from the AI-led narrative.
Valuation Still Reasonable: 34x Forward Earnings for 69% Revenue Growth
Despite near-all-time-highs, NVDA trades at ~34x forward earnings and 36x EV/EBITDA. Compared to Microsoft (32x) and AMD (30x), NVIDIA justifies its premium with superior margins (79% gross margin ex-H20 write-down), $60.9 billion in trailing 12-month FCF, and $9 billion in deferred Omniverse and DGX Cloud revenue. Free cash flow is compounding faster than earnings.
Robotics and Physical AI May Drive the Next Leg of Growth
Robotics remains underpriced. With partnerships across Yum! Brands, General Motors, and Mercedes-Benz, Isaac Sim is positioned to drive the next industrial revolution. NVIDIA’s enterprise and sovereign strategies converge here: physical AI at the edge, powered by CUDA, trained in Omniverse, and deployed with DGX infrastructure.
Buy Rating: $181 Price Target on Earnings Power and TAM Expansion
Consensus FY2027 EPS of $5.74 appears too low. Assuming a 5% beat and a 30x multiple, NVDA supports a $181 price target (+26% from current levels). Even at a conservative 25x, $143/share is base support. With 69% YoY growth, 73% data center surge, 42% gaming growth, and sovereign AI onboarding, NVIDIA is a Buy. The autoregressive era doesn’t just run on silicon. It runs on NVIDIA (NASDAQ:NVDA).
