Nvidia Just Delivered Another Blowout Quarter. Is the Stock Still a Buy?

Nvidia (NASDAQ: NVDA) continues to impress last month with its growing sales and earnings. The artificial intelligence (AI) bellwether blew past expectations yet again, with management predicting an even better current quarter than analysts are forecasting. Yet Nvidia stock is currently trading about 13% below recent highs.

Several factors have led investors to sell shares of the AI leader over the last month. Now that its latest results are in, though, it appears that the stock decline could be a gift for those who want to participate in the growing AI sector.

Here's why fears of an AI bubble look to be overstated.

Image source: Nvidia.

A critical data point soars

Nvidia reported that overall sales grew 62% year over year. That's an astounding figure considering the law of large numbers. Fiscal 2026 third-quarter revenue was $57 billion. Most of that -- $51.2 billion -- came from Nvidia's data center segment. The rate of revenue growth had, understandably, been gradually slowing in that massive segment. That changed in the third quarter.

Data center sales were not only 66% higher than the year-ago period, but also up 25% sequentially from the second quarter. The chart below clearly shows the reacceleration of that revenue growth.

Data source: Nvidia. Chart by author.

The most recent quarter notably broke a trend of declining sequential growth rates. While there's no guarantee the higher growth rate will continue, there are signs that it could.

Listen to CEO Jensen Huang

Nvidia CEO Jensen Huang hasn't been one to overhype the company. He has consistently backed up his guidance by surpassing revenue and earnings estimates. In the fiscal third-quarter release, Huang made this statement:

Blackwell sales are off the charts, and cloud GPUs are sold out. Compute demand keeps accelerating and compounding across training and inference -- each growing exponentially. We've entered the virtuous cycle of AI. The AI ecosystem is scaling fast -- with more new foundation model makers, more AI start-ups, across more industries, and in more countries. AI is going everywhere, doing everything, all at once.

That comment speaks for itself and should give investors confidence to buy Nvidia stock after the recent dip. One factor that may be holding them back is recent news from Google's parent company, Alphabet, that Meta Platforms may be utilizing Google's custom tensor processing units, or TPUs, to scale Meta's AI ambitions. Investors fear such a deal could eat into sales of Nvidia's GPUs.

TPUs and GPUs can coexist

Nvidia responded to those fears with a statement noting that Google has made significant advances in AI and reminding people that it remains a customer of Nvidia. Jensen Huang also stated, "Nvidia is a generation ahead of the industry -- it's the only platform that runs every AI model and does it everywhere computing is done."

That's what investors need to keep in mind. Google uses TPUs to train and deploy models for its Gemini AI project on TPU clusters. In specific scenarios, a TPU cluster can facilitate faster model training with potentially lower energy consumption. But GPUs are more flexible. TPUs are designed for Google cloud computers. Training models using one's own servers or on other cloud computing infrastructure requires GPUs.

Nvidia still leads the GPU race. While Alphabet and others are developing their own chips, much of the training of large language models and AI inference is best done on Nvidia's GPU stacks. Competing technologies are likely not flying under the radar for experts like Jensen Huang. Investors would do well to listen to his prediction for company sales growth. With that perspective, the Nvidia stock correction appears to be overdone, offering investors a favorable opportunity to buy shares now.

Howard Smith has positions in Alphabet and Nvidia and has the following options: short February 2026 $170 calls on Nvidia. The Motley Fool has positions in and recommends Alphabet, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy.