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While Nvidia currently receives most of its attention for AI infrastructure, the company’s gaming arm has made a surprise turnaround. In Q1 FY26, Nvidia’s gaming revenue reached a new record high of $3.8 billion. This represents a 42 per cent increase year-over-year and a quarter-over-quarter increase of 48 per cent. Analysts and investors alike have turned their heads towards the company due to the surprising spike in gaming revenue, while Nvidia’s AI divisions remain the company’s primary growth centre. The revenue from their gaming arm is now growing at the fastest pace it has seen in years, thanks to the rapid deployment of Blackwell GPUS and increased use of consumer-grade GPUs for AI.

The Blackwell Ramp: Faster GPU Rollouts

One of the key contributors to the surge in revenue from their gaming division is the Blackwell GPUS, which has had its release dates pushed forward. Nvidia claims that these next-generation chips provide increased performance for many to levels comparable to Super Sampling, Multi Frame Generation and DLSS.

- Speed of new product introduction exceeded that of previous cycles
- Promised gains in performance were touted as major
- Accompanied by AI-powered enhancements

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To these frameworks, however, benchmarks tell Moderation is the new bold. Improvements register as noteworthy in comparison to earlier performance levels, while in the framework of the game roping rope-exaggeration, concrete changes are not as gravity-defying as media might spin it.

AI Demand Boosting Gaming GPU Sales

Shifting tasks from gaming to AI is one of the reasons these numbers have changed. More and more startups and developers outside of the big tech companies need AI workloads, and RTX cards are now dominantly used in low-level AI work.

This change impacts the market in two primary ways:

- Inflated Sales Numbers: Boosts reported revenue from gaming GPU sales

- Reduced Availability for Gamers: Fewer GPUs reach traditional consumers

As such, both the availability in the market as well as the prices for gamers have increased.

Nvidia's Business Runs on AI

Along with the increase in revenues from gaming, Nvidia still operates under an AI-first company model. In Q1 FY26:

- Data centre revenue skyrocketed to $39.1 billion

- Close to 90% of the revenue is sourced from AI

This value rises by 73% each year. During the earnings call, Huang, the CEO, clarified that due to all these reasons, Nvidia classifies itself now as an AI infrastructure provider and no longer just a GPU manufacturer.

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Geopolitical Reasons Setbacks

In the quarterly report, things weren’t as smooth sailing as expected. Due to the US’s restrictions on exporting advanced chips to China, Nvidia marked a $4.5 billion write-down and predicted a $8 billion revenue loss in Q2, which is quite substantial.

Huang bluntly noted that U.S. chipmakers have “in effect, lost the use of” China’s AI market. Yet, there are still claims that many of the GPUs are making their way to China through other routes.

He also recognised the burgeoning competition in the arena of Chinese GPU startups, saying:

"Export restrictions have spurred China's innovation and scale. The AI race is not just about chips. It's about which stack the world runs on."

A well-cited example is a Chinese startup, said to be working on mass-producing an RTX 4060-class GPU, not even 3 years old in the business.

My Opinion

The financial performance of Nvidia’s Q1 FY26 demonstrates the company's stronghold on AI and gaming, with both divisions looking healthy. Even though the data centres still generate the bulk of the company’s revenue, the gaming sector’s unexpected growth underscores the gaming market’s appetite for high-end GPUs. At the same time, increasing geopolitical tensions coupled with an evolving supply chain landscape continue to impact the technology world. Whether for gamers or developers, Nvidia GPUs have become the focal point of competition across the globe, transcending mere enjoyment and touching the core of AI innovations.

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