Nvidia reported fiscal Q4 revenue of $68.1bn versus estimates of $65bn. Gross margin was 75%, up from 73.5% in the prior quarter, and Q1 revenue guidance was $78bn versus estimates of $72bn.
The company said 50% of revenue came from hyperscalers. It also reported growing enterprise use of AI agents, which could broaden demand beyond a small group of large buyers.
Supply Visibility And China Assumptions
Nvidia said it had secured supply to meet demand for several quarters. Its Q1 forecast assumes no demand from China, despite a projected 13% revenue uplift for the quarter.
Cash and cash equivalents rose by $20bn year on year to $62.6bn. The company is expected to update on progress with its GB300 chip, and may restate a $500bn sales pipeline forecast for this year.
The US has granted licences to export less advanced chips to China, and Beijing approved the purchase of 400,000 H200 GPUs for Tencent, Alibaba and ByteDance earlier this year. Trade friction remains a constraint.
The share price moved up after the release but then pared gains, staying below the 2% average move the day after results. The Nasdaq e-mini contract rose 1.4% after the report, and the sales pipeline forecast was unchanged at $500bn.
Market Reaction And Options Positioning
Looking back at this time in 2025, we saw a monster earnings report from Nvidia that initially failed to ignite a major rally. The market seemed hesitant despite the company smashing revenue estimates and providing a massive forecast. We are seeing a similar dynamic play out today, following the most recent earnings release last week.
The fundamentals are even stronger now, but the stock’s reaction remains somewhat measured, echoing the pattern from last year. This suggests that implied volatility on Nvidia options is likely elevated, as the market prices in the potential for a large move that may not fully materialize. Data shows implied volatility for near-term options is currently in the 75th percentile over the last year, making option premiums expensive.
For traders holding stock, this presents an opportunity to sell covered calls a few weeks out. This strategy allows us to collect that high premium, generating income while the market digests the news. If the stock trades sideways or rises only modestly, similar to the post-earnings drift we witnessed in 2025, the options will expire worthless and we keep the premium.
We must also consider the growing competition, which was less of a factor last year. Recent reports from January 2026 show that AMD’s MI300X chip has captured an estimated 10% of the AI accelerator market, up from just 3% a year ago. This could be creating a ceiling on Nvidia’s valuation that wasn’t there before, justifying a more range-bound trading strategy.
For those who are more bullish and believe last year’s muted reaction was a head-fake before a major rally, buying call debit spreads is a more sensible approach than buying outright calls. This strategy lowers the cost of entry and mitigates the impact of elevated implied volatility. It caps potential profit but offers a better risk-reward profile if the stock moves higher, but not explosively so.
The 2025 analysis noted a potential rotation into less-loved tech sectors like software. We are seeing signs of this again, as the iShares Expanded Tech-Software Sector ETF (IGV) has outperformed the VanEck Semiconductor ETF (SMH) by 4% over the past two weeks. This indicates that capital may be flowing away from the market leaders, suggesting caution is warranted for purely directional upside bets on Nvidia in the immediate future.
