Nvidia delivered a blowout earnings report Wednesday evening, exceeding expectations and signaling continued dominance in the burgeoning AI landscape. The chipmaker’s fiscal 2026 third-quarter revenue surged 62% year-over-year to $57.01 billion, handily surpassing the $54.92 billion consensus estimate compiled by LSEG. Adjusted earnings per share for the period ending October 26th climbed 67% to $1.30, beating the consensus estimate of $1.25, according to LSEG data.
The market responded favorably, with Nvidia shares jumping 5% in after-hours trading to $196. This trajectory puts the stock back on a path towards its record-high close of $207, achieved on October 29th, and a potential $5 trillion market capitalization. Analysts are revising their price targets upward, reflecting confidence in Nvidia’s future prospects.
Beyond the headline numbers, management’s guidance for the current quarter points to sustained momentum, exceeding both consensus estimates and the more elusive “whisper number” – the unofficial target circulating among buy-side firms like hedge funds and asset managers. Beating the whisper number is a significant achievement, indicating that the company is exceeding the expectations of even the most informed investors.
Nvidia’s success is deeply intertwined with the ongoing revolution in artificial intelligence. CEO Jensen Huang highlighted the confluence of three transformative computing trends during the earnings call. First, the industry is witnessing a rapid migration from CPU-based general computing to GPU-accelerated computing. GPUs, originally designed for graphics processing, have become indispensable for AI workloads due to their parallel processing capabilities, offering a significant advantage over traditional CPUs. This shift benefits Nvidia directly, as it holds a leading position in the GPU market.
Second, AI is rapidly reaching a “tipping point,” reshaping existing applications and paving the way for new innovations. Huang emphasized that generative AI is replacing classical machine learning in critical areas such as search ranking, recommendation systems, advertising optimization, and content moderation. This transformation is impacting the very foundation of hyperscale infrastructure and driving demand for Nvidia’s advanced hardware and software solutions.
Third, the emergence of “agentic AI” systems – AI capable of reasoning, planning, and executing tasks autonomously – is poised to further accelerate growth. These systems, which can perform complex operations without human intervention, represent a new frontier in AI and present significant opportunities for companies like Nvidia that are at the forefront of AI innovation.
Nvidia’s strength lies not only in its hardware but also in its growing software ecosystem, particularly the Nvidia AI Enterprise service. This offering is extending Nvidia’s reach beyond hardware sales and creating a recurring revenue stream.
Addressing key questions raised by analysts, management provided further insights into the company’s strategy and outlook. They expressed confidence in the continued growth of capital expenditure throughout the decade, driven by robust end-market demand. Huang stated that demand for Blackwell, Nvidia’s current chip platform, is exceptionally strong, with cloud GPUs already sold out. The company also plans to utilize its substantial free cash flow for strategic investments and continued share buybacks, demonstrating a commitment to delivering shareholder value.
Regarding the $500 billion in orders for Blackwell and the next-generation Rubin architecture, CFO Colette Kress clarified that Nvidia already has visibility into this revenue stream from the start of the fiscal year through the end of calendar year 2026. This strong order backlog provides a solid foundation for future growth and reinforces Nvidia’s position as a key enabler of the AI revolution.
While input costs are expected to rise in fiscal year 2027, management is committed to maintaining gross margins in the mid-70s, aligning with Street expectations. This demonstrates the company’s ability to manage costs effectively and maintain profitability in a dynamic market environment.
One notable omission from the earnings call was a detailed discussion of CEO Huang’s earlier comments on China’s potential to win the AI race. However, Huang reaffirmed Nvidia’s commitment to working with both U.S. and Chinese governments to ensure the company’s ability to compete globally.
Breaking down the segment results, the Data Center segment, Nvidia’s largest, saw revenue increase 66% year-over-year to $51.22 billion in fiscal 2026 Q3. This growth was driven by both compute revenue, which rose 56% to $43 billion, and networking revenue, which surged 162% to $8.2 billion. Other segments, including Gaming, Professional Visualization, and Automotive, also experienced growth, albeit at varying rates.
Looking ahead to the current fiscal 2026 fourth quarter, management’s outlook is optimistic, with revenue projected to reach $65 billion, plus or minus 2%. This guidance surpasses both the consensus estimate and the whisper number, further solidifying Nvidia’s position as a market leader in the AI era. Adjusted gross margins are expected to be around 75%, reinforcing the company’s strong profitability.
Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/13246.html
