Crypto Assets Surge then Recoil on NVIDIA Q1 Earnings Report

The world's biggest maker of chips for artificial intelligence reported its Q1 FY26 earnings on Wednesday, narrowly beating analysts' estimates for revenue, and gave positive guidance for future profitability.

A surge in Nvidia shares carried over to the tech sector and was matched by gains in crypto assets.

Nvidia's earnings highlights included:

• A record $44 billion in revenue, up 12% quarter-on-quarter and 69% year-on-year, beating consensus estimates of $43 billion.
• Growth was led by Data Center revenue of $39 billion (up 10% QoQ, 73% YoY) and Gaming revenue of $4 billion (up 48% QoQ, 42% YoY).
• Guidance for Q2 revenue for about $45 billion ±2%, factoring in an anticipated $8 billion impact from ongoing H20 export restrictions.
• Management expects gross margins to rebound to 72%, targeting a recovery to the mid-70% range later in the year.

"Every nation now sees AI as core to the next industrial revolution, a new industry that produces intelligence and essential infrastructure for every economy," said Jensen Huang, CEO of Nvidia in a statement. 

These positive takeaways came as part of a mixed overall picture.

• This quarter marks the fifth consecutive slowdown in revenue growth since peaking in Q4 FY24, when NVIDIA posted a record 265% YoY revenue surge.
• Profitability was sharply impacted by US export controls on NVIDIA’s H20 chip – its top-selling AI processor in China. It had a $4.5 billion inventory write-down and lost an estimated $2.5 billion in Q1 shipments, driving GAAP gross margin down to 61%, from 73% in the previous quarter and 78% a year ago.
• Earnings per share (EPS) on a non-GAAP basis came in at $0.81, missing analyst expectations of $0.93. Excluding the China-related H20 charge, EPS would have reached $0.96, indicating otherwise robust operational performance.

“Every nation now sees AI as core to the next industrial revolution”

– Jensen Huang, CEO of NVIDIA

Tech stocks advance

Despite the export-driven margin headwinds, investors responded positively, with NVIDIA shares jumping 5.5% in pre-market trading, underscoring strong confidence in the company's AI leadership and long-term outlook. 

The broader tech sector echoed this sentiment: the Invesco QQQ ETF rose 1.4% overnight, with pre-market gains across major names – Tesla (+2.4%), AMD (+2.3%), Amazon (+1.6%), and Apple (+1.6%). 

Crypto rallies

The bullish tone extended into digital assets.

• Ether led with a sharp rally, surging 6.5% between 13:00 and 20:00 (UTC‑7)
• Dogecoin reached its high at 20:00, posting a 5.0% gain
• Solana also peaked at 20:00, rising 3.5%
• Bitcoin peaked by 04:00 the following morning, up 1.8%

However, much of that momentum faded by the next trading day, as equities reversed course: AMD fell 2.1%, Tesla 1.9%, and Apple 1.8% from open to close. 

Gains reverse

The reversal suggests that while NVIDIA’s results sparked initial excitement, broader market sentiment remained cautious and short-lived.

A broad crypto correction followed by 17:00 the next day, as profit-taking and technical resistance set in:

• Ether fell 8.3% from its peak, ending 2.3% below its pre-announcement level
• Dogecoin led the downside, retreating 12.0% from peak, down 7.6% overall
• Solana dropped 8.7%, with an overall decline of 5.5%
• Bitcoin decreased 3.9% from its peak, for a net loss of 2.2%

Trading opportunity

NVIDIA’s performance reinforced its position at the core of the AI economy, even as export headwinds weighed on margins. However, the uptick in tech stocks in pre-market trading, and gains in major cryptocurrencies, soon faded with equities paring back gains and digital assets closing in the red – a harsh lesson for those who bought near the high point, but a great trade for those who were well positioned in advance of the report and took profits after the initial surge.

The whipsaw effect highlights a market environment that remains highly reactive – quick to reward strong signals, but just as quick to reassess risk – and posed an interesting opportunity for crypto traders adept in interpretating tech equities. NVIDIA's next quarterly earnings report is on 27 Aug.