NVIDIA's Profit Crown
Mirror, mirror on the Wall Street, who's the most profitable of them all?
Meaning, what's the most profitable quarter any company has ever had? Following NVIDIA's (once again) blockbuster earnings yesterday, I had a feeling they may had just broken the all-time record. They were close last quarter, with only a Saudi Aramco quarter from 2022 (shortly after the Ukraine war broke out, sending oil prices surging) seemingly ahead of them. Yes, they had even managed to top Apple's insanely great most recent holiday quarter. So this latest quarter for NVIDIA with new all-time highs must be the best, right?
This is a question which is not as straightforward as you might imagine. So much so that even AI struggles with it a bit (mainly due to the data cut-offs, forcing web searches to augment any lists with newer data). Further, there are different ways that different companies report profit (I'll get to that). Anyway, I've done the legwork and helped guide some AI friends to what I think is the answer.
From a pure operating profit, Saudi Aramco's Q2 2022 likely remains king. But that too is quite complicated and perhaps a bit unfair given the whole state-owned monopoly thing. So if we want to just make it a bit cleaner and just consider corporate America. Yes, NVIDIA takes the crown.
$53.5B in operating profit in the just-reported Q1 fiscal 2027 is the record holder, just beating out Apple's Q1 fiscal 2026 (which yes, is their most recent holiday quarter, and technically would have lined up with NVIDIA's Q4 fiscal 2026 – again, complicated) of $50.9B.
Let's just take a moment to sit on that number. $53.5B in profit. In one quarter. Earned by one company.
Okay, moving on. I had previously thought NVIDIA had overtaken Apple in profit last quarter, but there I was looking at net income. That number, at least when it comes to GAAP standards, is bullshit. No less than Warren Buffett has long harped on this because Berkshire Hathaway's business involves investing in other companies and the accounting principles dictate you have to mark such investments to market when you report earnings. This means that Berkshire's "profit" swings wildly based off of how their holdings are valued. Of course, that's not profit in money you actually make – unless you sell your holdings, of course – but simply the value of it.
This has come into play in the tech world in recent years because of the investments the Big Tech companies are making. This has actually long been the case – I worked for over a decade at Google's venture arm which yes, made outside investments that from time to time would move the net income needle for Alphabet – but the difference is the size and scope of these investments in AI.
Case in point: the actual record holder when it comes to net income for a quarter is not NVIDIA. Nor Apple. It's not even Saudi Aramco! It's Google.
Last quarter, the company wowed Wall Street in reporting a staggering $62.6B in net income. It was so far above and beyond analyst expectations that everyone pretty quickly realized what was going on. That surge had little to do with Google's underlying business (which, to be fair, remained great) and everything to do with one or two massive mark-ups in large Alphabet holdings. Namely, Anthropic and SpaceX. A full $36.9B of that $62.6B – more than half – was a result of those mark-ups.1
Again, that's silly since Alphabet didn't actually see any of that $36.9B come into their bank accounts. It's simply a paper gain. Yes, they could have sold it, but they didn't. Also selling those stakes would have brought a massive tax bill which would have cut those numbers significantly as well. Sure, they could leverage those holdings I suppose, but it's Google, they don't need such leverage. So until they sell those holdings and get the actual proceeds,2 it's just a weird way to talk about profits.
Anyway, back to the land of actual profits, NVIDIA is now king. Again, at least in corporate America. Just to note the Saudi Aramco situation, it's likely that in that Q2 2022 quarter that they booked something along the lines of $80B - $90B in operating profit.3 Yes, wild. But again because of their structure, a huge portion flowed back to state royalties and taxes immediately. That left them with a "mere" reported $48.4B in net income.
Speaking of, because NVIDIA is now by far the most active corporate investor – far outstripping Alphabet at this point – their numbers are likely to be all over the place in the coming quarters and years. Because it's a relatively new operation for them (at least at scale) and more so because of the insane growth of the actual underlying business, the paper gains/losses haven't had a big impact on the numbers yet for NVIDIA. Though they did boost net income this quarter in a way that is visible.
When everything is up and to the right, this obviously looks great – including on the all-important earnings-per-share (EPS) line. But if the market turns and/or some of those investments start to lose steam and value... just be ready.
For now, just from a pure operating profit perspective, NVIDIA is still growing an absolutely staggering 147% year-on-year. Even if that slows quite a bit (as the law of large numbers must dictate at some point, though NVIDIA keeps pushing those limits!), we could be looking at $100B in quarterly earnings for NVIDIA in relatively short order.
At that point, there would be no question who is king of the profit hill.
One more thing: I would just continue to point out how much of NVIDIA's business is built on the back of Big Tech. In a way, they're basically vacuuming up all of their cash flow (aside from Apple, of course). This is great for NVIDIA given the current state of things, but if something shifts...
M.G. Siegler
M.G. Siegler
1 And, I should note, it's going to happen again soon when SpaceX goes public in June. And then when Anthropic goes public after that... ↩
2 Again, see: said IPOs – though we'll see if Google exits as quickly as they can given the deals they're working on to use SpaceX rockets to get to their own payloads to space! It will likely remain a very strategic investment. Perhaps Anthropic too for the Cloud and TPU usage! ↩
3 This is a bit opaque without the same type of reporting standards, but can be sort of backed into knowing the low cost of producing a barrel of oil relative to the price surge back then (and knowing the reported net income, guesstimating the cut,taxes, etc). ↩