Nvidia Reports Strong Earnings Amid AI Potential Concerns

Shareholders of Nvidia (NASDAQ: NVDA) are pleased this week as management alleviated concerns about the company’s future performance amidst regulatory pressures. CEO Jensen Huang shared optimistic updates regarding Nvidia’s capabilities and the broader generative AI market, particularly highlighting Amazon (NASDAQ: AMZN).

Nvidia’s Robust Financial Performance

The market anticipated mixed results from Nvidia’s recent earnings report. Despite its position as a leading chipmaker, regulatory developments raised questions about the necessity of Nvidia’s high-priced chips in AI.

Concerns arose earlier this year when Chinese AI platform DeepSeek emerged, casting doubt on Nvidia’s role in generative AI. Additionally, regulatory restrictions impacted some chip shipments to China.

Nvidia CEO Jensen Huang. Image source: Nvidia.

Despite these worries, Nvidia’s fiscal first quarter results for 2026 demonstrated strong growth, with revenues rising 69% year-over-year to $44.1 billion, surpassing analysts’ expectations of $43.3 billion. Adjusted earnings per share (EPS) came to $0.96, ahead of the $0.93 target. Even after accounting for a one-time charge related to shipment regulations, the EPS totaled $0.81, significantly higher than last year’s $0.60.

Looking ahead, Huang emphasized the transformative potential of AI across various industries, stating that the company stands at the beginning of a pivotal technological shift.

Increased Demand for Nvidia’s Technologies

Nvidia is adapting well to the demand it has helped create. Its latest chips, Blackwell, are rapidly selling to major cloud clients like Amazon and Microsoft.

Colette Kress, Nvidia’s CFO, noted that Microsoft is using tens of thousands of Blackwell GPUs, with these chips making up 70% of Nvidia’s data center sales in the first quarter.

The company is developing more powerful GPUs to keep pace with AI advancements. Blackwell Ultra chips are rolling out this quarter, while even more advanced models are in the works to address the demand for generative AI.

Implications for Amazon’s Growth

Huang’s insights reflect sentiments shared by Amazon CEO Andy Jassy on the future landscape of generative AI:

“We envision a world where generative AI is integrated into nearly all applications, with inference as a core component.”

Amazon Web Services (AWS) leads the cloud services market with a 30% share, according to Statista. Recent partnership deals with companies like Adobe, Uber Technologies, and Cisco Systems highlight AWS’s growing influence.

This year, Amazon is investing over $100 billion in its AI initiatives. As most generative AI development occurs in the cloud, Amazon stands to gain if it continues to provide superior capabilities.

Jassy described a three-tier system for AI development, enabling businesses of all sizes to utilize generative AI efficiently. He believes AWS could evolve into even more substantial revenue-generating business than previously anticipated.

While developing its own budget-friendly chips for smaller clients, Amazon remains one of Nvidia’s key customers, relying on Nvidia’s advanced technology for larger accounts.

Both Huang and Jassy are aligned in their vision for AI’s future, making Nvidia’s success beneficial for Amazon as it adapts to market changes.

Investment Considerations for Amazon

Those considering an investment in Amazon should take note:

The Motley Fool Stock Advisor analyst team recently identified the 10 best stocks for investment, and Amazon was not among them. Historical data shows significant returns for those who invested in firms like Nvidia and Netflix when they were recommended earlier.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe, Amazon, Cisco Systems, Microsoft, Nvidia, and Uber Technologies. The Motley Fool’s disclosure policy is available online.

The views expressed here do not necessarily reflect those of Nasdaq, Inc.