First Light News: Nvidia Delivers in Q4 FY26 Earnings; Fed Speak Echoes Patience

Breaking Down the Nvidia Numbers

The company’s forward guidance for fiscal Q1 FY27 showed revenue beating estimates, coming in at US$78 billion, considerably above the US$73 billion estimate. Importantly, the report notes that Nvidia is ‘not assuming any Data Centre compute revenue from China in its outlook’. This was one of the questions investors had.

In terms of the Q4 data centre revenue numbers, this also came in stronger than expected at US$62.3 billion, versus US$60.36 billion. This marks a 75% increase from a year ago, and was primarily driven by ‘accelerated computing and AI’.

The Q4 GAAP gross margin reported 75.2%, beating the Street’s estimate of 75.0% and was above Q3 FY26’s reading of 73.6%. In terms of Q4 revenue, this comfortably cleared the US$66 billion forecast at US$68.1 billion, and was also up from US$57 billion in Q3. The adjusted EPS also came in higher than expected at US$1.62 against expectations of US$1.53.

According to the latest report, hyperscalers remain the company’s largest consumers, accounting for just over 50% of the data centre revenue – the remaining half is increasingly coming from so-called neo-clouds. This, of course, reduces dependence on a handful of mega-customers – such as Alphabet (GOOG), Amazon (AMZN), Meta (META) and Microsoft (MSFT) – and broadens the revenue base. Nvidia CEO Jensen Huang addressed concerns regarding demand, noting that customers are generating revenue from their AI compute investments, which is why capital spending will remain elevated.

Undoubtedly, these are strong numbers, and guidance is robust, though the NVDA Stock price only managed to catch a tepid bid – the reaction was certainly nothing to write home about. I think the bottom line here is that the AI trade is evolving fast. Hardware is winning, software is struggling, and nobody yet knows who ultimately profits from the buildout.

Fed Speak: Patience Remains the Name of the Day

It was also another day of Fed speak yesterday, and it largely echoed the tone of earlier commentary this week – one of a patient, data-dependent Fed.

Richmond Fed President Thomas Barkin spoke again yesterday and reiterated his cautious stance, underscoring tariff uncertainty while remaining relatively optimistic that inflation will cool. Kansas City Fed President Jeffrey Schmid largely aligned with this view, stressing that more work remains to be done on inflation, while at the same time acknowledging that the jobs market remains in a reasonable place.

St. Louis Fed President Alberto Musalem perhaps delivered the most balanced tone, highlighting that inflation and labour market risks are offsetting one another. With that said, he flagged that a deterioration in hiring could shift that calculus.

All three are aligned, more or less: price pressures need to ease before additional rate cuts are needed, and the jobs market must be monitored.

The outlier was Atlanta Fed President Raphael Bostic, who shone the spotlight on Fed independence in a farewell essay, titled ‘Farewell to the Best Job I’ve Ever Had’. Bostic is scheduled to step down and retire at the end of this month, having served as President at the Atlanta Fed since 2017.

Day Ahead

We have the Gorton and Denton by-election in the UK, with polling showing a three-way race between Labour, Reform, and the Greens. While this, of course, matters from a political perspective, I do not see it moving the market’s needle.

Today also brings the US weekly jobless claims for the week ending 21 February. Expectations ahead of the event suggest unemployment filings increased to 215,000, up from 205,000 in the week prior. The estimate range is currently between 230,000 and 203,000; given the forecast distribution, anything at or beyond these numbers could move the USD.

Another point to bear in mind ahead of this release is recent Fed speak – particularly from Boston President Susan Collins and Barkin – drawing attention to the jobs market being in a low-hire-low-fire mode.

Consequently, a meaningful upside surprise in today’s claims would likely reignite rate-cut speculation and weigh on the USD. A notably stronger claims reading would suggest more people are filing for unemployment insurance, underscoring that the low-fire part of the equilibrium could be breaking down and that layoffs are picking up.

Written by FP Markets Chief Market Analyst Aaron Hill