Risk factor changes · NVDA

What changed in NVIDIA's risk factors

Item 1A (Risk Factors) of NVIDIA's FY2026 10-K compared with its FY2025 10-K, sentence by sentence.

Newer: 10-K filed 2026-02-25 · Older: 10-K filed 2025-02-26

New in the latest 10-K 70

• Commercial arrangements expose us to counterparty risks, which may negatively impact our business, financial condition, or results of operations.
• These areas could damage our reputation, deter customers, affect product design, or result in legal or regulatory proceedings and liability.
• We have entered into an intellectual property license arrangement with Groq, Inc., or Groq, that required significant, nonrefundable payments.
• Successfully incorporating the licensed technology into our architectures and product roadmaps requires significant engineering effort and may not occur on expected timelines or at all.
• The licensed technology may not achieve the desired results as designed or achieve customer or ecosystem adoption.
• The economic outcomes of this arrangement depend on our ability to translate the licensed technology into commercially viable products and services over time, and we may be unable to recover the associated costs or realize an adequate return on this spend.
• If our efforts to use the licensed technology are delayed or unsuccessful, our business, operating results, and financial condition could be negatively impacted.
• We entered into multi-year cloud service agreements to support our research and development activities.
• The availability of data centers, energy, and capital to support the buildout of NVIDIA AI infrastructure by our customers and partners is crucial, and any shortage of these and other necessary resources could impact our future revenue and financial performance.
• Expanding energy capacity to meet demand is a complex, multi-year process involving significant regulatory, technical, and construction challenges.
• In addition, access to capital can be particularly constrained for less-capitalized companies, which may face difficulties securing financing for large-scale infrastructure projects.
• These limitations could delay customer and partner deployments or reduce the scale of accelerated computing and AI adoption.
• Publicly announced intentions by governments or other companies to purchase our products can further complicate our demand estimates, as such announcements are often non-binding and may not result in committed volumes.
• We expect supply constraints to be a headwind to Gaming in the first quarter of fiscal year 2027 and beyond.
• We are increasing our U.S.-based manufacturing and investing in specialized equipment and processes to support domestic production.
• We may experience delays or difficulties in scaling production as planned.
• Our ability to increase manufacturing capabilities will depend on the domestic manufacturing ecosystem's capacity to ramp production supply to the required volume timely.
• Delays or shortfalls could impact our ability to meet demand.
• Customers may delay adopting new architectures if their data center infrastructure is not ready, which could affect the timing of our revenue.
• Defects in our products have caused and could cause us to incur significant expenses to remediate, which can damage our reputation and cause us to lose market share.
• We acquire and invest in businesses that offer products, services and technologies that we believe will help expand or enhance our strategic objectives.
• Our investments in companies could create volatility and fluctuations in our results.
• These investments may generate realized and unrealized gains or losses and we could realize losses up to the value of the investments.
• We have invested and may continue to invest in our ecosystem.
• Many of these companies may not achieve profitability in the near term, or at all, and there is no guarantee that we will realize a return on our investment.
• We are finalizing an investment and partnership agreement with OpenAI.
• There is no assurance that we will enter into an investment and partnership agreement with OpenAI or that a transaction will be completed.
• We generate a significant amount of our revenue from a limited number of indirect customers, and we estimate some individually representing 10% or more of our revenue.
• Commercial arrangements expose us to counterparty risks.
• We have entered and may in the future enter into commercial arrangements, including long-term capacity purchase obligations and financial guarantees, and have been asked to offer financing arrangements to support our customers and partners buildout of datacenter infrastructure.
• We have not entered into any financing arrangements.
• Commercial arrangements expose us to counterparty risk, including customers' or partners' inability to fulfill their financial commitments and secure necessary financing or infrastructure, the occurrence of significant project delays, and counterparty financial distress or insolvency, all of which may negatively impact our business, financial condition, or results of operations.
• Financing arrangements, if undertaken, may in some circumstances result in lower upfront cash flows associated with extended payment terms or payment terms made over a multi-year term and may increase credit risk.
• On September 15, 2025, China s antitrust regulators published their preliminary finding that our compliance with applicable U.S. export controls, which required us to offer degraded products to the Chinese market, discriminated unfairly against customers in the China market and therefore violated the terms of China s approval of our Mellanox acquisition.
• Over the past three years, we have been subject to a series of shifting and expanding export control restrictions, impacting our ability to serve customers outside the United States.
• In April 2025, the USG informed us that it requires a license for export to China (including Hong Kong and Macau) and D:5 countries, or to companies headquartered or with an ultimate parent therein, of our H20 integrated circuits and any other circuits achieving the H20 s memory bandwidth, interconnect bandwidth, or combination thereof.
• As a result of these requirements, we incurred a $4.5 billion charge in the first quarter of fiscal year 2026 associated with H20 for excess inventory and purchase obligations, as the demand for H20 products diminished.
• In August 2025, the USG granted licenses that would allow us to ship certain H20 products to certain China-based customers.
• We generated approximately $60 million in H20 revenue under those licenses.
• USG officials expressed an expectation that the USG will receive 15% or more of the revenue generated from licensed sales of our products, but the USG did not publish a regulation codifying such requirement.

Reworded 94

Removed words are struck through; added words are highlighted.

• The following risks could harm our business, financial condition, results of operations or reputation, which could cause our stock 13 Table of Contents price to decline.
• Risks Related to Demand, Supply, and Manufacturing Long manufacturing lead times and uncertain supply and component capacity availability, combined with a failure to estimate customer demand accurately accurately, has led and could lead to mismatches between supply and demand.
• Risks Related to Demand, Supply, and Manufacturing Long manufacturing lead times and uncertain supply and capacity availability, combined with a failure to estimate customer demand accurately has led and could lead to mismatches between supply and demand. 12 Table of Contents Dependency on third-party suppliers and their technology to manufacture, assemble, test, or package our products reduces our control over product quantity and quality, manufacturing yields, and product delivery schedules and could harm our business.
• Product, system security and data breaches and protection incidents or breaches, as well as cyber-attacks could disrupt our operations and adversely affect our financial condition, stock price and reputation.
• A significant amount of our revenue stems from a limited number of partners and distributors and we have a concentration of sales to customers, customers who purchase directly or indirectly from us, and our revenue could be adversely affected if we lose or are prevented from selling to any of these end customers.
• Increased scrutiny Scrutiny regarding our corporate sustainability practices could result in financial, reputational, or operational harm and liability.
• These areas could damage our reputation, deter customers, affect product design, or result in legal or regulatory proceedings and liability. 14 Table of Contents Our operating results may be adversely impacted by additional tax liabilities, higher than expected tax rates, changes in tax laws, and other tax-related factors.
• Delaware law, provisions in our governing documents and our agreement with Microsoft could delay or prevent a change in control. 13 Table of Contents Risk Factors Risks Related to Our Industry and Markets Failure to meet the evolving needs of our industry and markets may adversely impact our financial results.
• Our success depends on our ability to: timely identify industry changes, adapt our strategies, and develop new or enhance and maintain existing products and technologies that meet the evolving needs of our markets, including addressing unexpected shifts in industry standards or disruptive technological innovations that could render our products incompatible with those developed by other companies; develop or acquire secure access to new products and technologies through investments in research and development; launch new offerings with new business models including software, services, and cloud solutions, as well as software-, infrastructure-, or platform-as-a-service solutions; expand the ecosystem for our products and technologies; meet evolving and prevailing customer and industry safety, security, reliability expectations, and compliance standards; manage product and software lifecycles to maintain customer and end-user satisfaction; develop, acquire, maintain, and secure access to the internal and external infrastructure needed to scale our business, including sufficient energy for powering data centers using our products, acquisition integrations, customer support, e-commerce, IP licensing capabilities, and cloud service capacity; and complete technical, financial, operational, compliance, sales and marketing investments for the above activities.
• The timing and availability of these cloud services have changed and may continue to shift, impacting our revenue, expenses, and development timelines. timelines, and these arrangements may not deliver anticipated benefits.
• These new business models or strategies may not be successful, and we may fail to sell any meaningful standalone software or services.
• Some of our competitors operate their own fabrication facilities, and have longer operating histories, larger customer bases, more comprehensive IP portfolios and patent protections, more design 15 Table of Contents wins, and greater financial, sales, marketing and distribution resources than we do.
• These competitors may be able to acquire market share and/or prevent us from doing so, more effectively identify and capitalize upon opportunities in new markets and end-user trends, more quickly transition their products, and impinge on our ability to procure sufficient 14 Table of Contents foundry capacity and scarce input materials during a supply-constrained environment, which could harm our business.
• If we are unable to successfully compete in this environment, demand for our products, services and technologies could decrease and we decrease, which may not establish meaningful revenue. negatively impact our business.
• These impacts The impact of these risks would be amplified by our non-cancellable and non-returnable purchase orders placed in advance of our historical lead times and could be exacerbated if we need to make changes to the design of future products.
• The risk of these impacts has These risks have increased and may continue to increase as our purchase obligations and prepaids have grown and are expected to continue to grow and become a greater portion of our total supply.
• Factors that have caused and/or could in the future cause us to underestimate or overestimate demand, and impact the timing and volume of our revenue, include: changes in product development cycles and time to market; competing technologies and competitor product releases, announcements or other actions; changes in business and economic conditions; sudden or sustained government lockdowns or public health issues; rapidly changing technology or customer requirements; the availability of sufficient data center capacity or energy for customers to procure; new product introductions and transitions resulting in less demand for existing products; new or unexpected end-use cases; increase in demand for competitive products; changes in end-user demand; 16 Table of Contents purchasing decisions made, and inventory levels held by, distributors, ODMs, OEMs, system integrators, other channel partners and other third parties; 15 Table of Contents the ability of developers, end customers and other third parties to build, enhance, and maintain accelerated computing applications that leverage our platforms; the availability of third-party content on our platforms, such as GeForce NOW; the demand for accelerated computing, AI-related cloud services, or large language models; changes that impact the ecosystem for the architectures underlying our products and technologies; government actions or changes in governmental policies, such as export controls, increased restrictions on gaming usage, or tariffs; and our customers' customers and partners ability to invest in AI infrastructure. secure capital and energy and to build complex datacenter infrastructure timely; and the availability of third-party content on our platforms, such as GeForce NOW.
• In addition, geopolitical tensions, such as those involving Taiwan and China, which comprise a significant portion of our revenue and Geopolitical tensions in regions where we have rely on suppliers, contract manufacturers, and assembly partners who that are critical to our supply continuity, could have a material adverse impact on us.
• With these additions, we We have also entered and may continue to enter into prepaid manufacturing and capacity agreements to supply both current and future products.
• Customers may delay purchasing existing products as we increase the frequency of new products or may not be able to adopt our new 16 Table of Contents products as fast as forecasted, both impacting the timing of our revenue and supply chain cost.
• Because our products may be used in multiple use cases and applications, it is difficult to estimate with any reasonable degree of precision the impact of generative accelerated computing and AI models on our reported revenue or forecasted demand.
• The use of our GPUs for new, mercurial, or trendy applications, has impacted and can impact in the future future, demand for our products, including by leading to inconsistent spikes and drops in demand.
• It is difficult for us to estimate with any reasonable degree of precision the past or current impact of cryptocurrency mining, or forecast the future impact of 17 Table of Contents cryptocurrency mining, on demand for our products.
• We face risks which have adversely affected or could adversely affect our ability to meet customer demand and scale our supply chain, negatively impact longer-term demand for our products and services, and adversely affect our business operations, gross margin, revenue and/or financial results, including: lack of guaranteed supply of wafer, component components and capacity; decommitment by our suppliers; potential higher wafer and component prices resulting from incorrectly estimating demand and failing to place orders with our suppliers with sufficient quantities or timely; failure by our foundries or contract manufacturers to procure raw materials or provide adequate levels of manufacturing or test capacity for our products; failure by our foundries to develop, obtain, or successfully implement high quality process technologies, including transitions to smaller geometry process technologies such as advanced process node technologies and memory designs needed to manufacture our products; failure by our suppliers to comply with our policies and expectations and emerging regulatory requirements; limited number and geographic concentration of global suppliers, foundries, contract manufacturers, assembly and test providers and memory manufacturers; loss of a supplier and additional expense and/or production delays as a result of qualifying a new foundry or subcontractor and commencing volume production or testing in the event of a loss, addition or change of a supplier; lack of direct control over product quantity, quality, and delivery schedules; integration of new suppliers and contract manufacturers creating more complexity in managing multiple suppliers with variations in production planning, execution, and logistics; suppliers or their suppliers failing to provide high quality products and/or making changes to their products without our qualification; 17 Table of Contents delays in product shipments, shortages, a decrease in product quality and/or higher expenses in the event our subcontractors or foundries prioritize our competitors or other customers orders over ours; requirements to place orders that are not cancellable upon changes in demand or requirements to prepay for supply in advance; low manufacturing yields resulting from issues in our product design or a foundry s proprietary process technology; suppliers extending lead times and/or increasing costs during shortages; and disruptions in manufacturing, assembly and other processes due to closures related to heat waves, earthquakes, fires, or other natural disasters, electricity conservation efforts, pandemics, and cybersecurity incidents. 18 Table of Contents Defects in our products have caused and could cause us to incur significant expenses to remediate, which can damage our reputation and cause us to lose market share.
• Any such defect Such defects have in the past had an adverse effect on our cost and supply of components and finished goods and may in the future cause us to incur significant warranty, support, and repair or replacement costs as part of a product recall or otherwise, write-off the value of related inventory, and divert the attention of our engineering and management personnel from our product development efforts to find and correct the issue.
• Economic and industry uncertainty or changes, including recession or slowing growth, inflation, changes or uncertainty in fiscal, monetary, or trade policy, disruptions to capital markets and the banking system, currency fluctuations, higher interest rates, tighter credit, lower capital expenditures by businesses, including on IT infrastructure, increases in unemployment, labor shortages, and lower consumer confidence and spending, global supply chain constraints, and global economic and geopolitical developments, including the implementation of tariffs by the USG or other governments, have in the past and/or could in the future have adverse, wide-ranging effects on our business and financial results, including: increased costs for wafers, components, logistics, and other supply chain expenses, which have negatively impacted our gross margin in the past and may do so in the future; 18 Table of Contents increased supply, employee, facilities and infrastructure costs and volatility in the financial markets, which have reduced and may in the future reduce our margins; decrease in demand for our products, services and technologies and those of our customers, partners or licensees; the inability of our suppliers to deliver on their supply commitments to us and our customers or our licensees inability to supply products to customers and/or end users; limits on our ability to forecast operating results and make business decisions; 19 Table of Contents the insolvency of key suppliers, distributors, customers, CSPs, data center providers, licensing parties or other third parties we rely on; reduced profitability of customers, which may cause them to scale back operations, exit businesses, file for bankruptcy protection and potentially cease operations, or lead to mergers, consolidations or strategic alliances among other companies, which could adversely affect our ability to compete effectively; and increased credit and collectability risks, higher borrowing costs or reduced availability of capital markets, reduced liquidity, adverse impacts on our customers and suppliers, suppliers; and failures of counterparties, including financial institutions and insurers, asset impairments, and declines in the value of our financial instruments.
• Additionally, we maintain an investment a portfolio of liquid investments for cash management purposes, including various holdings, types, and maturities.
• Our semiconductor wafers are manufactured, assembled, tested and packaged by third parties located outside of the United States, and we generated 53% 31% of our revenue in fiscal year 2025 2026 from sales outside the United States.
• Due to geopolitical conflicts 19 Table of Contents and during times of war or other major conflicts, we and the third parties we rely upon may be subject to a heightened risk of cyber-attacks that could materially disrupt our ability to provide services and products.
• Furthermore, we rely on products and services provided by third-party suppliers to operate certain critical business systems, including without limitation, cloud-based infrastructure, encryption and authentication technology, employee email and other functions, which exposes us to 20 Table of Contents supply-chain attacks or other business disruptions.
• Factors that have caused and/or could in the future cause disruptions to our worldwide operations include: natural disasters, extreme weather conditions, power or water shortages, critical infrastructure failures, telecommunications failures, supplier disruptions, terrorist attacks, acts of violence, political and/or civil unrest, acts of war or other military 20 Table of Contents actions, epidemics or pandemics, abrupt regulatory changes, and other natural or man-made disasters and catastrophic events.
• Political instability, changes in government or adverse political developments in or around any of the major countries in which we do business may harm our business, financial condition condition, and results of operations.
• Worldwide geopolitical tensions and conflicts, including but not limited to China, Hong Kong, Israel, Korea and Taiwan where the manufacture of our product components and final assembly of our products are concentrated may result in changing regulatory requirements, and other disruptions that could impact our operations and operating strategies, product 21 Table of Contents demand, access to global markets, hiring, and profitability.
• We are monitoring the impact of the geopolitical conflict in and around Israel on our operations, including the health and safety of our approximately 4,700 6,000 employees in the region who primarily support the research and development, operations, and sales and marketing of our networking products.
• Some We have experienced periods where some of our employees in the region have been on active military duty for an extended period and may continue to be absent, period, which may cause caused limited disruption to our product development or operations.
• Our business and those of our suppliers and customers may also be is subject to climate-related sustainability-related laws, regulations and lawsuits.
• These costs and restrictions could harm our business and results of operations by increasing our expenses or requiring us to alter our operations and product design activities. 21 Table of Contents Stakeholder groups may find us insufficiently responsive to the implications of climate change, and therefore we may face legal action or reputational harm.
• We may not be able to realize the potential benefits of business investments or acquisitions, and we may not be able to successfully integrate acquired companies, which could hurt our ability to grow our business, develop new products or sell our products. 22 Table of Contents We acquire and invest in businesses that offer products, services and technologies that we believe will help expand or enhance our strategic objectives.
• In addition, to the extent that our perceived ability to consummate acquisitions has been is harmed, future acquisitions may be more difficult, complex or expensive.
• In addition, we have invested and We may continue to invest in private companies to further our strategic objectives and to support certain key business initiatives. initiatives, which could be subject to delays and challenges in obtaining regulatory approvals.

Removed since the previous 10-K 51

• Delaware law, provisions in our governing documents and our agreement with Microsoft could delay or prevent a change in control.
• We offer enterprise customers NVIDIA DGX Cloud services, which include cloud-based infrastructure, software and services for training and deploying AI models.
• We have partnered with CSPs to host such software and services in their data centers, and we entered and may continue to enter into multi-year cloud service agreements to support these offerings and our research and development activities.
• NVIDIA DGX Cloud services may not be successful and will take time, resources, and investment.
• Risks Related to Demand, Supply, and Manufacturing Long manufacturing lead times and uncertain supply and component availability, combined with a failure to estimate customer demand accurately, has led and could lead to mismatches between supply and demand.
• For example, in fiscal year 2023, a defect was identified in a third-party component embedded in certain Data Center products.
• This defect has had, and other defects may in the future have, an adverse effect on our cost and supply of components and finished goods.
• These costs could be significant in future periods.
• We recorded a net warranty liability during fiscal year 2023 primarily in connection with this defect.
• While we believe we have accurately recorded for warranty obligations, we may need to record additional amounts in the future if our estimate proves to be incorrect.
• Stakeholder groups may find us insufficiently responsive to the implications of climate change, and therefore we may face legal action or reputational harm.
• Further, our investments in publicly traded companies could create volatility in our results and may generate losses up to the value of the investment.
• For fiscal year 2025, an indirect customer which primarily purchases our products through system integrators and distributors, including through Customer B, is estimated to represent 10% or more of total revenue, attributable to the Compute & Networking segment.
• Our business is dependent upon the proper functioning of our business processes and information systems and modification or interruption of such systems may disrupt our business and internal controls.
• For example, regulators in China are investigating whether complying with applicable U.S. export controls discriminates unfairly against customers in the China market.
• The licensing requirements also apply to any future NVIDIA integrated circuit achieving certain peak performance and chip-to-chip I/O performance thresholds, as well as any system or board that includes those circuits.
• There are also now licensing requirements to export a wide array of products, including networking products, destined for certain end users and for certain end uses in China.
• On October 23, 2023, the USG informed us that the licensing requirements were effective immediately for shipments of our A100, A800, H100, H800, and L40S products (removing the grace period granted by the official rule).
• Blackwell systems, such as GB200 NVL 72 and NVL 36 as well as B200 are also subject to these requirements and therefore require a license for any shipment to certain entities and to China and Country Groups D1, D4, and D5, excluding Israel.
• To date, we have not received licenses to ship these restricted products to China.
• After a 120-day delayed compliance period, the IFR will, unless modified, impose a worldwide licensing requirement on all products classified under Export Control Classification Numbers, or ECCNs, 3A090.a, 4A090.a, or corresponding .z ECCNs, including all related software and technology.
• Any system that incorporates one or more of the covered integrated circuits, or ICs, (including but not limited to NVIDIA DGX, HGX, and MGX systems) will be covered by the new licensing requirement.
• The licensing requirement will include future NVIDIA ICs, boards, or systems classified with ECCN 3A090.a or 4A090.a, or corresponding .z ECCNs, achieving certain total processing performance and/or performance density.
• Unless a license exception is available, the worldwide licensing requirements will apply to the following NVIDIA products, and any others we develop that meet the characteristics of 3A090.a or 4A090.a, including but not limited to: A100, A800, H100, H200, H800, B100, B200, GB200, L4, L40S, and RTX 6000 Ada.
• The AI Diffusion IFR would confer special benefits on select Universal Verified End Users , or UVEU, and lesser benefits on National Verified End Users , or NVEU.
• The AI Diffusion IFR would have numerous effects that may negatively impact our long-term financial results and competitive position, including but not limited to the following.
• The AI Diffusion IFR would reduce the market for U.S.-designed and manufactured computing products and services, by expressly limiting exports, reexports, and transfers of covered products to Tier 2 countries and companies in Tier 1 countries that are either headquartered in Tier 2, or have an ultimate parent headquartered in a Tier 2 country.
• These restrictions would apply to all covered products, including products sold years ago.
• The AI Diffusion IFR would limit access to the market for IT services and computing infrastructure, by favoring a select number of government-approved firms that achieve UVEU status.
• UVEUs may choose to favor their own accelerators, platforms, and systems, rather than selecting products based on merit.
• The AI Diffusion IFR would encourage our customers to invest in alternatives that are not affected by USG regulations, including foreign competition.
• The AI Diffusion IFR would increase our and our customers costs of doing business, creating compliance challenges and risks, and impact our supply and distribution chains, which will be subject to new compliance burdens and related extraterritorial regulatory obligations.
• The AI Diffusion IFR would expose U.S. providers and the U.S. industry to an enhanced risk of retaliation from other countries, in the form of tariffs, import/export controls, or other regulatory actions.
• The AI Diffusion IFR s licensing requirement could impact our ability to complete development of products in a timely manner, support existing customers using covered products, or supply customers with covered products outside the impacted regions, and may require us to transition certain operations out of one or more of the identified countries. 27 Table of Contents Following these 2022 export controls, we transitioned some operations, including certain testing, validation, and supply and distribution operations out of China and Hong Kong.
• Any future transitions could be costly and time consuming, and adversely affect our research and development and supply and distribution operations, as well as our revenue, during any such transition period.
• We expanded our Data Center product portfolio to offer new solutions, including those for which the USG does not require a license or advance notice before each shipment.
• To the extent that a customer requires products covered by the licensing requirements, we may seek a license for the customer.
• However, the licensing process is time-consuming.
• We have no assurance that the USG will grant such a license or that the USG will act on the license application in a timely manner or at all.
• Even if a license is approved, it may impose burdensome conditions that we or our customer or end users cannot or decide not to accept.

Source: SEC EDGAR filings, compared sentence by sentence by EdgarStack. Sentence matching is automated and may pair or split passages imperfectly; check the linked filings before relying on any passage. A software tool, not financial advice. Not affiliated with the U.S. Securities and Exchange Commission.