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Start free trialNVIDIA's core data center business operates in an oligopoly. Its main competitors for accelerated computing solutions include AMD, Intel, and large cloud service providers like Amazon, Google, and Microsoft who are developing their own custom chips.
"Our current competitors include: •suppliers and licensors of hardware and software for discrete and integrated GPUs, custom chips and other accelerated computing solutions, including solutions offered for AI, such as Advanced Micro Devices, Inc., or AMD, Huawei Technologies Co. Ltd., or Huawei, and Intel Corporation, or Intel; •large cloud services companies with internal teams designing hardware and software that incorporate accelerated or AI computing functionality as part of their internal solutions or platforms, such as Alibaba Group, Alphabet Inc., Amazon, Inc., or Amazon, Baidu, Inc., Huawei, and Microsoft Corporation, or Microsoft;"
In fiscal year 2026, two direct customers accounted for 22% and 14% of total revenue, respectively. These sales were primarily in the Compute & Networking segment.
"For fiscal year 2026, sales to one direct customer represented 22% of total revenue and sales to another direct customer represented 14% of total revenue, all of which were primarily attributable to the Compute & Networking segment."
NVIDIA's business is subject to the cyclicality of the semiconductor industry. Demand for its products can be volatile, influenced by capital investment cycles in data centers and consumer spending on PCs and gaming hardware.
"Long manufacturing lead times and uncertain supply and capacity availability, combined with a failure to estimate customer demand accurately, has led and could lead to mismatches between supply and demand."
NVIDIA benefits from significant economies of scale by amortizing its massive research and development investments across a large volume of products. The company has invested over $76.7 billion in R&D since its inception, an amount that smaller competitors cannot match, giving it a durable cost and technology advantage.
"We have invested over $76.7 billion in research and development since our inception, yielding inventions that are essential to modern computing."
A majority of NEO compensation is tied to financial performance. For the CEO, 96% of target pay is performance-based, comprised of variable cash tied to annual revenue, SY PSUs tied to annual Non-GAAP Operating Income, and MY PSUs tied to 3-year relative TSR. For other NEOs, approximately 48% of target pay is tied to the same performance metrics.
"96% of our CEO’s and 48% of our other NEOs’ Fiscal 2026 total target pay was dependent on corporate performance. ... PERFORMANCE METRICS Variable Cash Plan Metric Revenue ... SY PSUs Metric Non-GAAP Operating Income ... MY PSUs Metric TSR relative to the S&P 500"
The CEO, Jen-Hsun Huang, founded NVIDIA in 1993 and has served as CEO since the company's inception.
"Jen-Hsun Huang founded NVIDIA in 1993 and has served since its inception as President, Chief Executive Officer, and a member of the Board."
A significant mix shift is occurring within the company's largest segment, Compute & Networking. Revenue from Data Center networking grew 142% in fiscal 2026, much faster than the 59% growth in Data Center compute, driven by the ramp of NVLink, Ethernet, and InfiniBand platforms.
"Revenue from Data Center computing grew 59% driven by demand for our Blackwell computing platform. Revenue from Data Center networking grew 142% driven by the introduction and continued ramp of NVLink compute fabric for GB200 and GB300 systems and the growth of Ethernet and InfiniBand platforms."
NVIDIA's business benefits from strong network effects centered on its CUDA software platform. The platform's value increases as more developers build applications on CUDA, which in turn drives more customers to adopt NVIDIA's hardware, creating a self-reinforcing cycle.
"The large and growing number of developers and installed base across our platforms strengthens our ecosystem and increases the value of our platform for our customers."
The company is undergoing a business model transition from selling Hopper HGX systems to providing Blackwell full-scale datacenter solutions. This shift is material enough to have contributed to a decrease in gross margin from 75.0% in fiscal 2025 to 71.1% in fiscal 2026.
"Gross margins decreased to 71.1% in fiscal year 2026 from 75.0% in fiscal year 2025 as our business model transitioned from offering Hopper HGX systems to Blackwell full-scale datacenter solutions."
The company faces material regulatory risk from U.S. government export controls restricting sales of its advanced AI chips to China and other countries. These restrictions have effectively foreclosed NVIDIA from China's data center market, which the company states will have a material and adverse impact on its business.
"As of the end of fiscal year 2026, we were effectively foreclosed from competing in China's data center computing/compute market, and our effective foreclosure from the China market helped our competitors build larger developer and customer ecosystems to challenge us worldwide. Unless we are able to return with a product that meets the approval of both the USG and the Chinese government, our lost opportunity and the benefit to our competitors will have a material and adverse impact on our business, operating results, and financial condition."
The company employs the son and daughter of CEO Jen-Hsun Huang, who earned approximately $1.32 million and $1.23 million in Fiscal 2026, respectively. Additionally, the CEO's charitable foundation has an agreement with a third-party cloud provider, CoreWeave, to purchase GPU compute time for donation, and NVIDIA plans to offer engineering services for no charge to some recipients.
"The daughter and son of Jen-Hsun Huang, our President and CEO and a member of our Board, are employed by the Company. ... The total compensation for Fiscal 2026 of the daughter and son of Mr. Huang was approximately $1,232,000 and $1,320,000, respectively. ... The Jen-Hsun and Lori Huang Foundation, or the Huang Foundation, a charitable organization, has entered into an agreement with CoreWeave, Inc., a third-party cloud services provider, to purchase GPU compute time for donation to university and other non-profit research institutes to develop open science and AI research, of which $108.3 million has been donated to date."
NVIDIA's core business is providing accelerated computing platforms for Artificial Intelligence, a market experiencing massive secular growth. The company's platforms are used by all major cloud providers, AI model makers, and enterprises to develop and deploy AI solutions.
"NVIDIA is now a data center scale AI infrastructure company reshaping all industries. ... GPU-powered AI solutions are being developed by thousands of enterprises to deliver services and products that would have been immensely difficult or even impossible with traditional coding."
NVIDIA's diluted weighted average shares outstanding have declined over the past three fiscal years, from 24,940 million in fiscal 2024 to 24,804 million in fiscal 2025, and further to 24,514 million in fiscal 2026.
"Diluted 24,514 24,804 24,940"
NVIDIA's proprietary CUDA software platform creates high switching costs for customers. Applications and models developed using CUDA and its extensive libraries are optimized for NVIDIA's GPUs and would require significant time, cost, and engineering effort to port to a competitor's platform.
"Our technology stack includes the foundational NVIDIA CUDA development platform that runs on all NVIDIA GPUs, as well as hundreds of domain-specific software libraries, frameworks, algorithms, software development kits, or SDKs, and application programming interfaces, or APIs."