Nvidia reported its Q3 earnings on November 19.
During the earnings call, Jensen Huang, CEO of Nvidia, said:
“The transition to Generative AI is transformational and necessary, supercharging existing applications and business models. The transition to Agentic and Physical AI will be revolutionary, giving rise to new applications, companies, products, and services. As you consider infrastructure investments, consider these three fundamental dynamics. Each will contribute to infrastructure growth in the coming years.”
Here are the Nvidia Q3 earnings highlights:
- Revenue of $57.0 billion, up 22% from Q2 and up 62% from a year ago
- GAAP and non-GAAP gross margins were 73.4% and 73.6%, respectively.
- GAAP and non-GAAP earnings per diluted share were both $1.30.
The company provided an outlook for Q4 2026:
- Revenue is expected to be $65.0 billion, plus or minus 2%.
- GAAP gross margins are expected to be 74.8% plus or minus 50 basis points.
- GAAP operating expenses are expected to be approximately $6.7 billion
Colette Kress, EVP and CFO, addressed Michael Burry’s claims that hyperscalers are understating depreciation for GPUs during the earnings call:
Major companies provide a useful life of up to 6 years for network and compute hardware; therefore, Kress’s statement confirms these estimates, which means Burry is wrong.
Shutterstock
Bank of America increases its EPS estimates for Nvidia
Following the release of the earnings, Bank of America analyst Vivek Arya and his team updated their opinions on Nvidia (NVDA) stock.
The team raised their fiscal year 2027 and 2028 EPS estimates for NVDA by 5% and 6% to $7.40 and $9.70, respectively with potential upside if all orders were to materialize into sales.
Related: Investors hope good news from Nvidia gives the rally more life
Analysts said that their base AI capital expenditures total addressable market outlook of approximately $1.2 trillion indicates that Nvidia’s EPS power will double to approximately $20 per share in calendar year 2030 from approximately $10 per share in calendar year 2027, at approximately 75% Nvidia share (vs. current 80-85%).
According to the team, four things stand in Nvidia’s way of achieving its fair valuation:
- Stock is well-owned, by over 75% of institutional investors at 1.13 multiple S&P500 index weighting,
- Nvidia’s investments into unprofitable customers such as OpenAI, Anthropic and others,
- Practical constraints of data center space, power, etc.,
- Limited operational leverage given continued operating expenses requirement.
In a research note shared with TheStreet, Arya reiterated a buy rating and the target price of $275, based on 28 multiple his estimate for the price to earnings ratio excluding cash for the calendar year 2027, which is within Nvidia’s historical forward year price to earnings range of 25 to 56.
Analysts noted downside risk factors for Nvidia:
- Weakness in the consumer-driven gaming market,
- Competition with major public firms,
- Larger than expected impact from restrictions on computer shipments to China
- Lumpy and unpredictable sales in new enterprise, data center, and auto markets,
- Potential for decelerating capital returns,
- Enhanced government scrutiny of Nvidia’s dominant market position in AI chips.
Goldman Sachs and JPMorgan raise Nvidia price target to $250
Goldman Sachs analyst James Schneider reiterated a buy rating and raised Nvidia’s stock price target to $250, citing steady demand for AI gear, as reported by TipRanks.
More Nvidia:
- Is Nvidia’s AI boom already priced in? Oppenheimer doesn’t think so
- Morgan Stanley revamps Nvidia’s price target ahead of big Q3
- Investors hope good news from Nvidia gives the rally more life
- Bank of America resets Nvidia stock forecast before earnings
- AMD flips the script on Nvidia with bold new vision
JPMorgan analyst Harlan Sur also reiterated a buy rating and raised the Nvidia stock price target to $250. He noted that the new view reflects strong adoption of Nvidia chips across cloud firms and new model teams.
Despite strong earnings and guidance, and positive analyst reactions, Nvidia stock closed the Thursday trading session 3.15% lower at $180.64, which now puts it about 12.75% lower than its October 29 peak, which had a closing price of $207.04.
The sell-off continues and some investors likely became even more skeptical about AI and circular financing after Nvidia’s deal with Anthropic.
Brian Mulberry, senior client portfolio manager at Zacks Investment Management, told TheStreet in his comments on the deal: “It is getting hard to keep track of the financial interests here. Anthropic technically is a competitor of OpenAI, but Microsoft has a 27% stake in OpenAI, and NVDA announced a $100 billion partnership with OpenAI. I fear that it’s no longer circular but a tangled web.”
Related: Three billionaires just issued a shocking Nvidia warning
