Nvidia sales outlook tops $91 billion as rivals rise

2026-05-21

Nvidia on Wednesday projected revenue of $91 billion for the May-July 2026 period, up 95% from a year earlier. The forecast topped market expectations, but shares barely moved after the earnings release. As rivals in the U.S. and China gain ground in AI semiconductors, views on Nvidia's dominance are starting to shift.

Big tech spending lifts demand

Revenue for the February-April 2026 quarter rose 85% from a year earlier to $81.615 billion. Net profit more than tripled to $58.321 billion, marking a record high for a quarterly period. The sales outlook for May-July 2026 also beat the roughly $87 billion average forecast compiled by QUICK and FactSet.

Behind the strong results is heavy investment by major U.S. tech companies. Capital spending by Alphabet's Google, Amazon.com, Meta and Microsoft in 2026 is expected to reach $725 billion, up 76% from a year earlier. Demand is concentrating on Nvidia, which holds about an 80% share of the AI semiconductor market, and cash on hand had swelled to roughly $50 billion at the end of April. The company also announced an additional $80 billion share buyback.

Rival gains weigh on stock

In after-hours trading, buying and selling were mixed. Gross margin for the May-July 2026 period was forecast at 75%, in line with market expectations. While still a strong sign of pricing power, the absence of one-sided buying reflected growing concern over a changing competitive landscape.

A prime example is Google, one of Nvidia's key customers. Google is advancing development of TPU semiconductors that improve the efficiency of AI response processing, and is looking beyond use in its own Gemini generative AI. According to U.S. research firm Omdia, it held a 5% share of the AI semiconductor market in 2025. On the 18th, it said it would form a joint venture with Blackstone for a cloud computing business using TPUs. Amazon is also designing its own chips with an eye to outside sales.

Startups are moving quickly as well. U.S. Cerebras Systems in January struck a deal with OpenAI to supply more than $2 billion in semiconductors and other computing resources. Its concept differs from the traditional method of linking multiple chips, instead concentrating functions into a single large chip to speed data transfer.

China uncertainty lingers

Chinese rivals are also emerging as a threat to Nvidia. China, under government direction, is building out its AI semiconductor supply chain and backing firms such as Huawei Technologies. Reuters reported that Chinese AI startup DeepSeek has developed AI models that can run on Huawei's Ascend AI semiconductors, sending demand for the product surging. Alibaba Group also unveiled a new AI semiconductor on the 20th and said it will launch new products every year through 2028.

Nvidia is effectively shut out of the Chinese market for now. The U.S. government has conditionally allowed exports of the H200 high-performance semiconductor to China, but Chinese authorities appear to be urging domestic companies to refrain from buying it, and shipments have not proceeded. There were no H200 exports to China in the February-April 2026 quarter, and the May-July outlook does not include computing-related revenue for Chinese data centers. Sales to companies based in China fell 53% to $4.55 billion in the February-April 2026 quarter, and their share of total revenue declined by 5.6 percentage points.

CUDA remains the key

Chief Executive Jensen Huang stressed that the company has been preparing for the age of agentic AI. In addition to semiconductor hardware, Nvidia has established its software platform CUDA as an industry standard for AI development. Although competition is intensifying, there is limited belief that the company's core position will be shaken anytime soon. At the earnings briefing, Huang said Nvidia can meet broad demand as a platform for the AI era.

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