🤖 NVIDIA Reports Record Sales Again

💵 NVIDIA Reports Record Sales Again

🇨🇳 China’s Industrial-Scale Distillation Attacks

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On Wednesday, NVIDIA delivered better-than-expected quarterly results, with Q4 FY2026 performance showcasing sustained sales growth with record profits. The chipmaker achieved a staggering $68.1 billion in revenue, a 73% increase compared to the same period last year.

NVIDIA’s data center sales accounted for $62.3 billion, or roughly 91% of that revenue. Unsurprisingly, $51.3 billion came from compute revenue through the Blackwell GPU architecture, and $11.0 billion came through networking products like NVLink interconnect. So, what’s fueling this explosive growth? It’s all because of “rising token usage.”

A token is a word or part of a word. For example, “yesterday” might be broken into three tokens: “yes,” “ter,” and “day.” In other words, tokens are units of text that enable language models like Gemini, Claude, or ChatGPT to understand humans. They bridge the gap between human input and machine processing.

Every time a language model generates a response, it processes these tokens by performing AI inference, which involves carrying out massive amounts of mathematical calculations on the Blackwell GPU architecture.

Since February 2025, NVIDIA’s “market cap” has grown by roughly $1.89 trillion, a gain of about 55% in just 12 months. For context, that’s like planting a tree and growing a forest overnight. NVIDIA’s now worth 51 Nikes and 2,310 JetBlues.

NVIDIA CEO Jensen Huang notes visibility to a $500 billion cumulative revenue opportunity through the end of calendar year 2026, led by the highly anticipated “Rubin CPX,” a single, super-efficient specialized computer chip that’s optimized for AI inference to process more tokens without compromising on speed or accuracy.

Anthropic recently published “Detecting and Preventing Distillation Attacks,” alleging that multiple Chinese frontier AI firms, including MiniMax, DeepSeek, and Moonshot AI, illegally reverse-engineered the capabilities of Claude.

They executed a coordinated data extraction effort by leveraging distillation: the process of transferring knowledge from a larger “teacher” model to a smaller “student” model. This process enabled them to efficiently clone the logic and reasoning of the larger “teacher model” with significantly fewer computational resources at a fraction of the cost.

The Chinese frontier AI firms generated 16 million exchanges across 24,000 fraudulent Claude plans. They achieved this by deploying “Hydra Cluster” Architectures: sprawling networks of virtualized devices, synthetic identity stacks, and rotating residential proxies that mimic geographically diverse human users.

Designing GPUs requires rare materials, specialized machinery, and engineering expertise. China doesn’t currently possess any of these at the level needed to produce the most cutting-edge semiconductors. This critical limitation allowed the U.S. to maintain America’s compute advantage to protect national security by controlling the supply of GPUs.

We’re witnessing the death of the “compute moat,” with distillation rapidly breaking the traditional computational barriers that once protected American top-tier AI firms. What once required hundreds of millions of dollars of GPUs can now be replicated by extracting the logic and reasoning from larger “teacher” models for pennies on the dollar.

Nimble raised a $47M Series B to process everything on the internet.

Basis landed a $100M Series B to pioneer the next era of accounting.

MatX closed a $500M Series B to engineer high-throughput AI chips.

Alloy (New York City, NYC): Software Engineering Intern, Summer 2026

Palantir (Washington, D.C.): Software Engineer, Defense, Entry-Level

Waymo (Taipei City, TW): Silicon Emulation Engineer, Driving, Mid-Level

Anthropic (San Francisco, CA): Transfer Pricing Director, Senior-Level