On Wednesday after the market close, Nvidia (NVDA 1.47%) delivered a powerful fourth-quarter fiscal 2026 report. The leader in graphics processing units (GPUs), considered the "gold standard" for enabling AI, has seen its fortunes soar as demand for AI capabilities has surged.
For the quarter ended Jan. 25, Nvidia's revenue rocketed 73% year over year to $68.1 billion, beating Wall Street's $66.2 billion estimate. Adjusted earnings per share (EPS) soared 82% to $1.62, surpassing the analyst consensus estimate of $1.54. Moreover, management guided for fiscal Q1 revenue of $78 billion, crushing the $72 billion analysts had expected.
Earnings releases tell only part of the story. Management's comments during earnings calls often contain important information about a company's prospects and strategy. Below are two key topics from Nvidia's Q4 earnings call that you should know about.
Image source: Getty Images.
1. In fiscal 2026, sovereign AI revenue more than tripled year over year
From the remarks of CFO Colette Kress:
Every country will build and operate some parts of its AI infrastructure, just like with electricity and Internet today.
In fiscal year 2026, our sovereign AI business more than tripled year over year to over $30 billion, driven primarily by customers based in Canada, France, the Netherlands, Singapore, and the UK. Over the long run, we expect our sovereign opportunity to grow at least in line with the AI infrastructure market, as countries spend on AI proportional to their GDP.
Sovereign AI refers to "proprietary, country-specific AI infrastructure built to serve national technological and data requirements," per The Motley Fool's AI definition.
Putting $30 billion in context: In fiscal 2026, Nvidia's total revenue and data center platform revenue were $215.9 billion and $193.7 billion, respectively. This revenue grew 65% and 68%, respectively, year over year.
So, Nvidia's sovereign AI business accounted for about 13.9% of its total annual revenue, which is significant. This percentage is likely to grow very quickly, as sovereign AI revenue grew more than 3 times faster than overall revenue and more than 2.9 times faster than total data center platform revenue.
In addition to not wanting to fall behind technologically, I suspect some of the sovereign AI growth is due to NATO countries seeking AI capabilities for defense applications. Along with the U.S., Canada and the European NATO countries have begun significantly beefing up their defense spending over the last year.
Investors should love this business. Nvidia acts as a consultant of sorts on its sovereign AI business. It would seem to me that once a country starts its AI infrastructure journey with Nvidia, it is less likely than for-profit commercial customers to change providers (not that there are many choices).
NASDAQ: NVDA
Key Data Points
2. CEO Jensen Huang: "Artificial intelligence in space will have very good, very interesting applications."
AI in space is a topic I've been planning to write about, as the space economy is poised for rapid growth in the mid- to long-term. Nvidia will dominate the market for AI tech in space just as it does on Earth, in my opinion. This is a longer-term high-growth market that gets little attention.
From Huang's remarks:
The economics [for space-based AI data centers] are poor today, but [will] improve over time. The... methods that we use here on Earth are a little different than the way we would do it in space.
But there are many different computing models that really want to be done in space. And so, Nvidia is already the world's first GPU in space, Hopper [Nvidia's last GPU architecture] is in space.
And one of the best use cases of GPUs in space is imaging. To be able to image at extremely high resolutions using optics and artificial intelligence [is hard to do] by sending petabytes and petabytes of imaging data back here on Earth and doing that work. It is easier just to do it out in space. ... And so artificial intelligence in space will have very good, very interesting applications.
Nvidia's tech is already used in space-based applications. Specifically, its Jetson platform products, which contain embedded GPUs, are being used on satellites for edge computing applications (such as imaging). However, these are lower-powered products.
Last November marked the first time a powerful, advanced AI chip, Nvidia's H100 (H stands for Hopper, Nvidia's prior data center GPU architecture), made the trip into space. Starcloud, a start-up in Nvidia's inception program (an incubation program of sorts for start-ups that Nvidia deems promising), launched a satellite carrying an Nvidia H100 chip.
Starcloud's ultimate goal is to build data centers in space. The company projects that space-based data centers will offer 10x lower energy costs than Earth-based data centers.
