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Nvidia's data center segment reached 92% of revenue last quarter
By Bear Creek Staff, . Bear Creek Capital Network.
The Motley Fool's 8 October review cited Nvidia's valuation at roughly 25 times forward earnings. Whether that is good value depends on the earnings forecast behind it and on how long demand holds. The review does not identify the forecast period or whose estimates they are, which limits how precisely a reader can assess the multiple.
One segment carries almost all of the revenue
In the quarter ended 26 July 2026, Nvidia reported revenue of $96.2 billion, of which the data center segment was $89.0 billion. That is 92% of the company's sales in a single quarter, and the concentration has been tightening: data center was 90% of revenue across fiscal 2026, the year ended in January, at $193.7 billion of $215.9 billion.
A slowdown in cloud provider capital spending therefore reaches the top line with nothing large enough beside it to absorb the difference. Those buyers have not pulled back so far, and their own spending rests on customer demand that has not been through a full economic cycle.
What the bull case rests on
Revenue of $215.9 billion in fiscal 2026 is around eight times the level of five years earlier. Nvidia has also issued annual revenue guidance for the first time, projecting 70% growth in the year ahead, and the review puts collective infrastructure spending by the largest technology buyers at close to $700 billion this year. The 70% is the company's revenue guidance, not an earnings estimate, and not the forecast the 25x is calculated against. The $700 billion is the publication's own figure.
The new processor line
Nvidia has projected $20 billion in central processor sales this year and has said it wants to lead that segment. Both are statements about a year that has not finished. The argument for the line is that agentic AI, where a system reasons through a task and then acts on it, leans on central processors rather than on graphics chips alone. What is settled is narrower: Nvidia is selling a processor line at a scale it was not two years ago.
China narrowed the market from both ends
The restrictions concern the H20, the data center processor Nvidia built for the Chinese market. From April 2025 the company needed a US licence to export it, and took a charge of up to approximately $5.5 billion against H20 inventory and purchase commitments. The licence requirement was later eased, and Beijing then discouraged domestic buyers from the H20 through guidance to large technology firms rather than through a ban.
The practical effect is an addressable market smaller than the permission suggests, and a competing domestic supply base being built with state encouragement. Neither has a date on which it resolves.
Competition could pressure pricing
Displacing Nvidia means matching the hardware and the software ecosystem built around it, which is why rival designers have taken share slowly. Price is the more likely pressure point: share does not have to fall for discounting to start, and discounting can reach margins and revenue both.
What the multiple depends on
The review concludes in favour of the bull case, citing current demand, the processor opportunity and a valuation it calls a bargain.
A low forward price to earnings ratio depends on the earnings forecast being achieved. Weaker spending by data center customers, or thinner profitability on the same sales, would reduce those earnings, and the multiple would reprice against the smaller number rather than protect anyone from it. With one segment at 92% of revenue, there is little else in the mix to offset it.
Sources. Quarterly and annual figures are from Nvidia's results releases, linked above. The April 2025 licence requirement and the $5.5 billion charge are from the company's 8-K of 9 April 2025. The later easing of that requirement and Beijing's guidance to domestic buyers are from contemporaneous news reporting. The forecast period and estimate source behind the 25 times figure are not given in the review and are not established here.
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