Nvidia Stock in an AI Bubble? The AI Giant's Fantastic Q3 Results and Guidance Should Put That Concern to Rest
Key Points
Fiscal third-quarter revenue and adjusted earnings per share (EPS) soared 62% and 60%, respectively, year over year, surpassing Wall Street's expectations.
Q4 guidance also exceeded the analyst consensus estimates on the top and bottom lines.
Nvidia's report indicates that the outlook for the AI market in general remains robust.
- 10 stocks we like better than Nvidia ›
Shares of Nvidia (NASDAQ: NVDA) are up 4.5% in Wednesday's after-hours trading as of 5:57 p.m. ET, following the artificial intelligence (AI) tech leader's release of its report for its third quarter of fiscal 2026 (ended Oct. 26, 2025).
Investors' positive reaction is attributable to Q3 revenue and adjusted earnings per share both beating Wall Street's estimates, and Q4 guidance for both the top and bottom lines also coming in higher than analysts had expected.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
The strong guidance was probably the most significant catalyst for Nvidia stock's upward move. It's an indication that the outlook for the AI market in general remains robust.
In recent weeks, Nvidia and other AI stocks have been struggling. Investors have become increasingly concerned about AI stock valuations, fearing that an AI stock bubble may be forming. These struggles were in part caused by the Nov. 4 revelation that Michael Burry, now a former hedge fund manager, took bearish positions (by buying put options) on Nvidia and Palantir stocks in the third quarter.
Image source: Getty Images.
Nvidia's key numbers
| Metric | Fiscal Q3 2025 | Fiscal Q3 2026 | Year-Over-Year Change |
|---|---|---|---|
| Revenue | $35.08 billion | $57.01 billion | 62% |
| GAAP operating income | $21.87 billion | $36.01 billion | 65% |
| GAAP net income | $19.31 billion | $31.91 billion | 65% |
| Adjusted net income | $20.01 billion | $31.77 billion | 59% |
| GAAP earnings per share (EPS) | $0.78 | $1.30 | 67% |
| Adjusted EPS | $0.81 | $1.30 | 60% |
Generally accepted accounting principles (GAAP) numbers include one-time items. Investors should focus on the adjusted numbers, which exclude one-time items.
Wall Street was looking for adjusted EPS of $1.26 on revenue of $55.09 billion, so Nvidia exceeded both expectations. It also beat its own guidance, which was for adjusted EPS of $1.22 on revenue of $54 billion.
For the quarter, GAAP and adjusted gross margins were 73.4% and 73.6%, respectively.
Platform performance
| Platform | Fiscal Q3 2026 Revenue | Year-Over-Year Change | Quarter-Over-Quarter Change |
|---|---|---|---|
| Data center | $51.22 billion | 66% | 25% |
| Gaming | $4.27 billion | 30% | (1%) |
| Professional visualization | $760 million | 56% | 26% |
| Automotive | $592 million | 32% | 1% |
| OEM and other | $174 million | 79% | 1% |
| Total | $57.01 billion | 62% | 22% |
The data center platform's performance was driven by "three platform shifts -- accelerated computing, powerful AI models, and agentic applications," Colette Kress said in her CFO commentary. She added that "Blackwell Ultra is now our leading architecture across all customer categories while our prior Blackwell architecture saw continued strong demand."
The 1% sequential slip in gaming revenue is no cause for concern. Kress said that distribution channels have reached "more normalized levels heading into the holiday season."
Professional visualization had a strong quarter, driven by the launch of the company's new DGX Spark (a compact AI supercomputer) and the growth of Blackwell sales.
Auto revenue growth was driven by the continued adoption of Nvidia's self-driving platforms, which are widely adopted by car companies and others developing driverless technology and driverless vehicles.
What the CEO had to say
CEO Jensen Huang stated in the earnings release:
Blackwell sales are off the charts, and cloud [computing] GPUs [graphics processing units] 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.
Guidance for the fourth quarter
For Q4 of fiscal 2026, which ends in late January, management expects revenue of $65 billion, representing a year-over-year growth rate of 65%.
Management also guided (albeit indirectly, by providing several inputs) for adjusted EPS of $1.50, representing 69% growth.
Going into the report, Wall Street had been modeling for Q4 adjusted EPS of $1.43 on revenue of $61.84 billion, so the company's outlook sprinted by both expectations.
Nvidia stock is not in a bubble
In short, Nvidia delivered yet another report with fantastic quarterly results and strong guidance.
Nvidia stock is not in a bubble. Shares were priced at 52 times trailing one-year earnings and 27 times forward one-year earnings at the close of Wednesday's regular trading session. These are reasonable valuations for a company that has just grown its quarterly adjusted EPS by 60% and guided for adjusted EPS growth of 69% next quarter.
Should you invest $1,000 in Nvidia right now?
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $615,279!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,111,712!*
Now, it’s worth noting Stock Advisor’s total average return is 1,022% — a market-crushing outperformance compared to 188% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of November 17, 2025
Beth McKenna has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
Recommended Articles
