Net income tripled, but the chip business did not. Of NVIDIA's $69,903 million in pre-tax income for the quarter ended April 26, 2026, $15,929 million — 22.8% — came from the Other income (expense), net line, and the filing attributes the year-over-year swing in that line almost entirely to unrealized marks: $13.4 billion on publicly held equity securities and $2.6 billion on non-marketable stakes. Strip the line out and pre-tax income was $53,974 million. Revenue, by contrast, is cash business, and it rose 85.2% to $81,615 million from $44,062 million a year earlier. The distinction matters because NVIDIA now carries $82.5 billion of equity investments, equal to 31.8% of total assets, so its reported earnings have become partly a function of other companies' share prices. All figures below are drawn from NVIDIA's Form 10-Q for the first quarter of fiscal year 2027, filed with the SEC, unless otherwise noted.
1. Consolidated Balance Sheet
1-1. Major Asset Lines
| Item | Jan 25, 2026 ($M) | Apr 26, 2026 ($M) | Change % |
|---|---|---|---|
| Cash and cash equivalents | 10,605 | 13,237 | +24.8% |
| Marketable debt securities | 39,065 | 37,098 | -5.0% |
| Marketable equity securities | 12,886 | 30,237 | +134.6% |
| Accounts receivable, net | 38,466 | 40,710 | +5.8% |
| Inventories | 21,403 | 25,797 | +20.5% |
| Property and equipment, net | 10,383 | 12,403 | +19.5% |
| Goodwill | 20,832 | 20,894 | +0.3% |
| Intangible assets, net | 3,306 | 3,120 | -5.6% |
| Non-marketable securities | 22,251 | 43,364 | +94.9% |
| Total assets | 206,803 | 259,474 | +25.5% |
Total assets grew $52,671 million in thirteen weeks. Investments, not factories, did most of that. Non-marketable securities — stakes in private companies — nearly doubled, and marketable equity securities more than doubled. Together with $8,864 million of public shares parked in Other assets under lock-up through December 2027, equity investments reach $82,465 million.
One caveat the headline gain does not carry: of the $39,101 million in publicly held equity securities, the filing discloses that $27.4 billion — about 70% — was subject to lock-up restrictions at quarter end. NVIDIA marked those positions to market, but it could not have sold most of them.
Receivables grew far slower than revenue, which is the healthy direction. Days sales outstanding — how long the company waits to get paid — fell to 45.4 days from 51.4 days at the January balance date. Inventory tells a forward-looking story instead: raw materials jumped 74.6% to $6,647 million from $3,807 million, while finished goods barely moved. That is a company buying components ahead of a product it has not shipped yet. Management says the Rubin platform starts shipping in the second half of fiscal 2027.
Debt is almost an afterthought. The $8,470 million net carrying amount is essentially unchanged from January's $8,468 million. Of the $8,500 million face value, $1,000 million matures within a year and $2,750 million in one to five years, so 44% falls due inside five years at a weighted average coupon of roughly 2.9%. Coupons run from 1.55% to 3.70%, and the maturity ladder stretches to 2060 — $3,500 million of the face value does not come due until 2040 or later. A $25.0 billion commercial paper program sits entirely undrawn.
Operating lease assets rose to $4,258 million from $2,867 million, with $1,516 million of new leases signed in the quarter. The forward commitment is the number to watch: management expects to commence $32.4 billion of additional leases between Q2 FY2027 and fiscal 2033, mostly data centers, with terms of 3 to 20 years.
1-2. Liability Structure — Financial vs. Operating
Financial debt totals $8,470 million against $195,474 million of equity, a ratio of 4.3%. Add $4,344 million of operating lease liabilities and the picture barely changes. NVIDIA does not have a leverage problem.
It does have a commitment problem — or at least a commitment scale, and it sits off the balance sheet. Manufacturing, supply and capacity commitments stood at $119 billion at quarter end, of which $95 billion is payable in the remaining nine months of fiscal 2027. Add $30 billion of multi-year cloud service commitments, $6 billion of other vendor commitments and the $32.4 billion of leases management expects to commence through fiscal 2033, and the contractual obligations NVIDIA has already signed total roughly $187 billion — against a $259 billion balance sheet and $8.5 billion of actual borrowings. Any assessment of this company's financial risk that stops at the debt line is looking at the wrong page. The obligations are in purchase orders, not bonds, and they are underwritten by the assumption that AI capex keeps growing.
Operating liabilities are where the movement is. Accounts payable rose 33.5% to $13,097 million, and accrued and other current liabilities rose 39.5% to $29,787 million. Almost all of that second jump is one line: taxes payable went from $2,669 million to $10,638 million, an increase of $7,969 million. The filing explains why — NVIDIA made no federal income tax payments in Q1, and Q2 is scheduled to include two. This is a timing shift, and it reverses next quarter.
Two other accruals deserve a look. Excess inventory purchase obligations stand at $3,121 million, up from $2,739 million, meaning the company is still carrying reserves against components it committed to buy but may not use. Accrued purchase consideration of $3,957 million relates to the Groq, Inc. non-exclusive license agreement.
1-3. Capital Structure
Paid-in capital is trivially small relative to the balance sheet. Common stock plus additional paid-in capital is $10,299 million; retained earnings is $185,038 million. Essentially all of NVIDIA's equity is money it earned and kept.
The quarterly roll confirms it: $146,973 million opening retained earnings, plus $58,321 million net income, less $20,013 million charged for buybacks and $243 million of dividends, equals $185,038 million. (The $20,013 million charged to retained earnings and the $19,312 million of cash actually paid for repurchases differ by settlement timing.) Additional paid-in capital moved only $157 million despite $1,928 million of stock-based compensation, because $2,129 million of employee tax withholding and the buyback offset it. Share count fell to 24,221 million from 24,304 million.
2. Consolidated Statement of Income
2-1. Core Profit Metrics
| Item | Q1 FY26 ($M) | Q4 FY26 ($M) | Q1 FY27 ($M) | YoY |
|---|---|---|---|---|
| Revenue | 44,062 | 68,127 | 81,615 | +85.2% |
| Gross profit | 26,668 | — | 61,157 | +129.3% |
| Gross margin (%) | 60.5 | 75.0 | 74.9 | — |
| Operating income | 21,638 | 44,299 | 53,536 | +147.4% |
| Operating margin (%) | 49.1 | 65.0 | 65.6 | — |
| Net income | 18,775 | 42,960 | 58,321 | +210.6% |
| Net margin (%) | 42.6 | 63.1 | 71.5 | — |
| Diluted EPS ($) | 0.76 | 1.76 | 2.39 | +214.5% |
The 14.4 point gross margin expansion is mostly an artifact of the comparison. A year ago NVIDIA took a $4.5 billion charge on excess H20 inventory and purchase obligations after export rules changed. Management quantifies the drag from all inventory provisions at 11.0% of revenue in Q1 FY26 versus 1.2% this quarter. Normalize both periods and gross margin went from 71.5% to 76.1% — real improvement of about 4.6 points, not 14.4.
The same correction applies to operating income. Adding back the $4.5 billion charge, prior-year operating income was roughly $26,138 million, so the underlying growth is about 105%, not 147%. Against 85.2% revenue growth, that is operating leverage of roughly 1.23x — for every 1% of revenue growth, operating profit grew 1.23%. Respectable, but nothing like what the headline implies. Sequentially the effect is gone entirely: revenue rose 20% and operating income rose 21%.
Below the operating line is where the quarter gets unusual. Other income (expense), net of $15,929 million compares with a $180 million expense a year ago. The filing attributes the year-over-year swing of $16,109 million primarily to $13.4 billion of unrealized gains on publicly held equity securities held at quarter end and $2.6 billion of unrealized gains on non-marketable equity securities. Neither is cash. Neither is recurring.
Removing the $15,929 million entirely leaves pre-tax income of $53,974 million. Applying the reported 16.6% effective tax rate gives roughly $45.0 billion of net income and about $1.85 of diluted EPS — still up sharply from $0.76, but a very different number from $2.39. NVIDIA's own non-GAAP measure, which strips these gains out along with stock-based compensation and acquisition-related items, came to $1.87 per diluted share; the company and this calculation land in the same place. The effective tax rate itself rose to 16.6% from 14.3%, because stock-compensation tax benefits shrank relative to a much larger pre-tax base.
EPS growth of 214.5% against net income growth of 210.6% shows how little buybacks contributed. Diluted weighted average shares fell only 0.9%, to 24,391 million from 24,611 million.
2-2. Cost Structure and Segments
| Segment | Q1 FY26 Rev ($M) | Q1 FY27 Rev ($M) | Q1 FY26 Op Inc ($M) | Q1 FY27 Op Inc ($M) | Op Margin |
|---|---|---|---|---|---|
| Compute & Networking | 39,589 | 74,550 | 22,054 | 53,335 | 55.7% → 71.5% |
| Graphics | 4,473 | 7,065 | 1,640 | 2,941 | 36.7% → 41.6% |
| Total segment | 44,062 | 81,615 | 23,694 | 56,276 | — |
Segment operating income excludes stock-based compensation, unallocated corporate costs and acquisition-related charges, so it does not tie to the $53,536 million consolidated figure; the $2,740 million difference is those excluded items.
Compute & Networking is 91.3% of revenue and 94.8% of segment operating income. Under the newly recast market-platform view, Data Center revenue was $75,246 million — 92.2% of the company. Within it, Hyperscale grew 115% to $37,869 million and the broader AI Clouds, Industrial & Enterprise bucket grew 74% to $37,377 million. The two are now almost exactly equal, which is the diversification story management is trying to tell.
Operating expenses rose 51.5%, well below revenue. R&D rose 58.5% to $6,321 million but fell to 7.7% of revenue from 9.1%. The composition inside R&D is the interesting part: compute and infrastructure spending rose 112% and engineering development materials rose 204%, against a 31% rise in compensation. Two of the three fastest-growing cost lines are variable and tied to bringing up a new architecture. Because U.S. GAAP requires R&D to be expensed immediately rather than capitalized, all of that Rubin development cost hits this quarter's operating income — a point worth remembering when comparing margins with companies reporting under IFRS.
3. Consolidated Statement of Cash Flows
| Item | Q1 FY26 ($M) | Q1 FY27 ($M) | Change |
|---|---|---|---|
| Operating cash flow | 27,414 | 50,344 | +83.6% |
| Investing cash flow | (5,216) | (26,429) | — |
| Financing cash flow | (15,553) | (21,283) | — |
| Ending cash | 15,234 | 13,237 | — |
Free cash flow — operating cash flow less capital expenditure — was $48,587 million against $26,187 million a year ago. Capital intensity is remarkably low for a company of this scale: $1,757 million of purchases of property, equipment and intangibles equals 2.2% of revenue, down from 2.8%. NVIDIA does not own fabs, and it shows.
Earnings quality needs a careful read here. Operating cash flow divided by net income is 0.86, below the 1.0 threshold that normally signals trouble, and down from 1.46. But the cause is mechanical — the cash flow statement backs out $15,936 million of net gains from equity securities, a slightly different line from the $15,929 million of Other income (expense), net, which also carries foreign-currency and credit-derivative marks. None of it was cash. Measured against the $45.0 billion of net income excluding those gains, the ratio is 1.12. The underlying conversion is fine.
A second adjustment cuts the other way. The $7,969 million increase in taxes payable is a deferral, not a saving. Backing it out leaves roughly $40.6 billion of free cash flow, which is the more durable figure.
Where did the money go? $19,312 million to buybacks and $243 million to dividends. Then $18,582 million into non-marketable securities and $8,000 million into marketable debt and equity securities. NVIDIA generated $48.6 billion of free cash and ended the quarter with only $2,632 million more cash than it started with. Stock-based compensation was $1,928 million, or 2.4% of revenue, down from 3.3%.
Two board decisions dated May 18, 2026 — after the quarter closed, and disclosed as subsequent events — reset the capital-return run rate. The quarterly dividend went from $0.01 to $0.25 per share, which on the current share count lifts the quarterly outlay from $243 million to roughly $6.1 billion, or about $24 billion a year. The board also added $80.0 billion to the repurchase authorization, without expiration. Read alongside the $187 billion of purchase and lease commitments in Section 1-2, this is a company committing its next several years of cash flow well in advance.
4. What Else the Filing Shows
Customer concentration is accelerating. Three direct customers accounted for 21%, 17% and 16% of revenue — 54% combined. A year ago, two customers made up 30% (16% and 14%). On the balance sheet it is tighter still: three direct customers hold 30%, 18% and 16% of receivables, or 64%, up from 56% in January. That is $26.1 billion of the $40.7 billion receivable balance sitting with three counterparties.
The geographic table has stopped describing end demand. Revenue from customers headquartered outside the United States fell to 22% of the total from 42% a year ago — a 20 point shift in twelve months. The filing is explicit that revenue is assigned by the location of the direct customer's headquarters, and that "the end customer and shipping location may be different." So the swing says more about which legal entity signs the purchase order — increasingly a US-domiciled hyperscaler — than about where the GPUs are installed or who ultimately uses them. Investors tracking Asian demand, including Korean cloud and enterprise buildouts, cannot read it off this table.
The ecosystem investments raise a circularity question. NVIDIA put $18.6 billion into private companies and infrastructure funds this quarter, and the filing states plainly that "some of these investments include AI model makers that may indirectly purchase or use our products in the cloud." Separately, it estimates that "one AI research and deployment company contributed to a meaningful amount of our revenue by purchasing cloud services from our customers." NVIDIA has also guaranteed partners' facility lease obligations — agreements entered in fiscal 2026, running 5 to 7 years — with maximum gross exposure of $3.5 billion, taking warrants in exchange, against $712 million the partners placed in escrow.
Disclaimer: This article is journalism based on NVIDIA Corporation's Form 10-Q for the quarterly period ended April 26, 2026, and the company's Q1 FY2027 earnings release. It is not investment advice, and LineVest News is not a registered investment adviser. Figures marked as calculated or normalized are the author's derivations from filed data, not company-reported measures.