Nvidia Earnings: No Signs of a Near-Term AI Bubble; Raising Fair Value

Key Morningstar Metrics for Nvidia

What We Thought of Nvidia’s Earnings

Nvidia NVDA reported fiscal third-quarter revenue of $57 billion, up 22% sequentially, up 62% year over year, and ahead of guidance of $54 billion. Nvidia’s forecast for the January quarter of $65 billion would be ahead of the FactSet consensus estimate of $62 billion and be up 65% year over year.

Why it matters: Nvidia again delivered excellent revenue growth as artificial intelligence demand still exceeds supply. Results contrast with AI bubble fears, although we view the risks as longer-term in nature. Nvidia’s supply chain is expanding even faster than in prior quarters, allowing for revenue acceleration.

• Data center revenue was $51.2 billion, up 66% year over year and up by $10 billion or 25% sequentially. Nvidia’s supply commitments are up 63% year over year, and the firm is preparing for even stronger growth with its latest Blackwell Ultra products.
• Nvidia has reiterated its expectations of $500 billion of Blackwell and Rubin product revenue by the end of calendar 2026, which we think implies $300 billion-plus of data center revenue in calendar 2026. Nvidia still foresees $3 trillion-$4 trillion of annual AI infrastructure spending by 2030.

The bottom line: We raise our fair value estimate for wide-moat Nvidia to $240 from $225 as we lift our revenue estimates in the near term and beyond. We keep our Very High Morningstar Uncertainty Rating, given the fast-moving deals being made in AI. Shares rose about 6% after hours.

• We still see Nvidia shares as undervalued and view recent AI bubble chatter as a buying opportunity. Longer-term concerns about AI funding and energy buildouts are valid in the medium to long term, but 2026 is shaping up to be another stellar AI year, in our view.

Coming up: Nvidia not only expects strong revenue growth in the January quarter, but also healthy gross margins in the 75% range. The firm is seeing higher input costs, but we anticipate that Nvidia’s strong pricing power will enable the firm to pass these costs on to customers.