NVIDIA Reports Record Q3 FY26 Revenue with Exceptional Data Center Growth Driving Strong Profitability

Analyst: Qudus Adebara (Founder of Wane Investment House, Nigeria)

Executive Summary

NVIDIA Corporation delivered a record performance for the third quarter ended October 26, 2025, with revenue of $57.0 billion, up 62% YoY and 22% QoQ, reflecting robust demand across AI, cloud, and data center workloads. The company’s gross margins remained exceptionally high at 73.4% GAAP and 73.6% non-GAAP, supported by operational efficiency and the strong adoption of NVIDIA Blackwell and Rubin systems. Profit Before Tax (PBT) rose 65% YoY to $37.9 billion, reflecting strong operating leverage from data center and gaming revenue growth. Profit After Tax (PAT) came in at $31.9 billion, up 65% YoY, with diluted earnings per share of $1.30, demonstrating strong shareholder value creation.

NVIDIA’s balance sheet remains exceptionally robust, with total assets of $161.1 billion, including $60.6 billion in cash and short-term investments, and total equity of $118.9 billion. The company returned $37 billion to shareholders through share repurchases and dividends in the first nine months of fiscal 2026, with $62.2 billion still authorized for buybacks. Overall, NVIDIA continues to scale as the AI ecosystem accelerates, with its Data Center business emerging as the core growth engine, supported by strategic partnerships, sovereign AI projects, and continuous innovation across GPUs, DPUs, and AI infrastructure solutions.

Financial Highlights – Statement of Profit or Loss ($’million)

$’million       Q3 FY26       Q3 FY25       YoY    QoQ

Revenue      57,006          35,082          +62%  +22%

Cost of Revenue   15,157          8,926  +70%  +70%

Gross Profit  41,849          26,156          +60%  +60%

Operating Expenses        5,839  4,287  +36%  +8%

Operating Income          36,010          21,869          +65%  +27%

Net Income 31,910          19,309          +65%  +21%

Diluted EPS ($)       1.30    0.78    +67%  +20%

Gross Margin (%)   73.4% 74.6% (1.2 pts)       +1.0 pts

Effective Tax Rate 15.9% 13.5% +2.4 pts        +2.4 pts

Revenue Performance

NVIDIA delivered strong top-line growth, with record revenue driven by Data Center demand and AI adoption:

Key Growth Drivers:

• Data Center Revenue: $51.2 billion, up 66% YoY and 25% QoQ, powered by Blackwell GPU adoption, large-scale cloud partnerships, and sovereign AI projects.
• Gaming & AI PCs: $4.3 billion, up 30% YoY, reflecting new game launches and RTX AI PC adoption.
• Professional Visualization: $760 million, up 56% YoY, led by compact AI supercomputers (DGX Spark).
• Automotive & Robotics: $592 million, up 32% YoY, driven by DRIVE Hyperion 10 platform and industrial AI partnerships.

Revenue growth was broad-based but clearly led by Data Center, highlighting NVIDIA’s position at the heart of global AI infrastructure.

Summary

Metric          Q3 FY26       Q3 FY25       YoY    QoQ

Total Revenue       $57.0bn       $35.1bn       +62%  +22%

Data Center Revenue     $51.2bn       ~30.8bn       +66%  +25%

Gaming Revenue  $4.3bn         ~$3.3bn       +30%  -1%

Pro Visualization    $760m          ~$487m        +56%  +26%

Automotive & Robotics   $592m          ~$448m        +32%  +1%

Data Center contributed ~90% of total revenue, reflecting NVIDIA’s transformation into the essential compute backbone for global AI infrastructure.

Business Segment Commentary

1. Data Center – The Core Growth Engine

Record revenue: $51.2bn (+66% YoY)

Growth drivers:

• Surging demand for Blackwell GPUs (off-the-charts per CEO commentary)
• Large-scale cloud deployments: Google Cloud, Microsoft, Oracle, xAI
• OpenAI partnership for 10 GW AI infrastructure
• Sovereign AI investments (UK, Germany, South Korea, UAE, etc.)
• Industrial AI expansion with partners like Siemens, PTC
• Rapid expansion by hyperscalers (Microsoft, Google, Oracle, Amazon)
• Mega-deals with OpenAI and Anthropic
• Broad adoption across sovereign AI, enterprise AI, and industry-specific AI
• Strategic announcements indicate NVIDIA is shaping the global AI infrastructure roadmap, including:
• Partnerships with Intel for custom chips integrated with NVLink
• NVIDIA’s expansion into AI networking (Spectrum-X) and AI cloud blueprints (Omniverse DSX)
• New processor classes (Rubin CPX, NVQLink quantum integration)
• New product cycles:
  • Rubin CPX (massive-context GPU)
  • NVQLink for quantum + GPU integration
  • Omniverse DSX AI factory blueprint
  • BlueField-4 DPU for data center automation

This division will continue to dominate revenue and shape guidance.

2. Gaming

Revenue: $4.3bn (+30% YoY) Highlights:

• Launch of Borderlands 4, Battlefield 6 using DLSS 4
• RTX AI PC advancements
• Strong GeForce ecosystem on 25th anniversary

Demand remains stable, but clearly overshadowed by Data Center.

3. Professional Visualization

Revenue: $760m (+56% YoY) Driven by:

• NVIDIA DGX Spark, a compact AI supercomputer
• Enterprise AI adoption for digital twins and simulation

4. Automotive & Robotics

Revenue: $592m (+32% YoY) Key drivers:

• DRIVE Hyperion 10 (L4-ready platform)
• Partnerships with Uber, Toyota, Foxconn, Caterpillar
• Physical AI and industrial robotics gaining traction

This remains a long-duration optionality segment.

Profitability and Margins

Operating Leverage:

• Operating income grew 65% YoY due to strong Data Center scale and efficient cost management.
• R&D and SG&A increased (+36% YoY) reflecting continued investment in AI architecture and software platforms.

Gross Margin:

• GAAP gross margin remained robust at 73.4%, slightly lower than Q3 FY25 due to product mix, but non-GAAP margin held at 73.6%.

Net Income & EPS:

• PAT of $31.9 billion (+65% YoY) reflects strong demand and high-margin Data Center revenue.
• Diluted EPS reached $1.30, up 67% YoY, demonstrating strong shareholder returns.

Balance Sheet Overview ($’million)

$’million       Q3 FY26       Q3 FY25       % Δ

Total Assets  161,148        96,013          +68%

Cash & Short-Term Investments 60,608          38,487          +57%

Accounts Receivable     33,391          17,693          +89%

Inventory     19,784          7,654  +158%

Total Liabilities       42,251          30,114          +40%

Total Equity  118,897        65,899          +80%

Net Debt     (50,127)        (28,262)        –

Interpretation:

• Asset growth driven by Data Center expansion, inventory buildup, and cash accumulation.
• Equity growth reflects retained earnings and capital deployment efficiency.
• Strong net cash position supports aggressive share repurchase and dividend programs.

Key Ratios & Indicators – Q3 FY26

Metric          Performance

Revenue Growth YoY      +62%

Gross Margin         73.4%

Operating Margin 63.2%

Net Income Growth YoY +65%

EPS Growth YoY     +67%

Free Cash Flow ($bn)      13.9

Cash / Total Assets 38%

Debt / Equity         0.09

Insights:

• Exceptional margin profile sustained despite heavy R&D investment.
• Free cash flow generation remains robust, enabling capital returns.
• Data Center growth drives high operating leverage, dominating overall performance.

Strategic Insights

• NVIDIA’s AI infrastructure leadership is securing long-term revenue visibility, with Blackwell and Rubin GPUs at the core of AI cloud expansion.
• Strategic partnerships with OpenAI, Google Cloud, Microsoft, Oracle, and sovereign governments expand adoption globally.
• Aggressive investment in industrial AI, robotics, automotive AI, and professional visualization diversifies long-term growth streams.
• Strong balance sheet supports continued share repurchases, dividends, and strategic M&A if opportunities arise.

Strengths

• Dominant market position in AI compute and GPUs.
• High-margin Data Center revenue driving profitability.
• Robust cash generation and strong net cash position.
• Broad ecosystem of AI, cloud, and industrial partners.
• Scalable AI infrastructure solutions across multiple sectors.

Weaknesses

• Heavy dependence on Data Center segment for revenue growth (~90% of revenue).
• Inventory and accounts receivable growth may create near-term working capital pressures.
• Margins exposed to product mix shifts and supply chain dynamics.

Outlook

NVIDIA is well-positioned for continued hyper-growth in AI and compute-intensive workloads:

• Q4 FY26 revenue: $65 billion ±2%
• Gross margin: ~75%
• Operating expenses: $6.7bn GAAP / $5.0bn non-GAAP
• Continued expansion of Blackwell and Rubin systems globally.
• Strategic partnerships and sovereign AI projects to sustain long-term Data Center growth.

Key risks include macroeconomic pressures, semiconductor supply constraints, and competition from alternative AI chips, but NVIDIA’s ecosystem leadership provides a durable competitive advantage.

Analyst View

“NVIDIA delivered one of the strongest quarters in corporate history, driven by record Data Center revenue and accelerating AI adoption globally. High-margin growth, strong free cash flow, and shareholder returns highlight the company’s operational discipline and strategic foresight. With continued AI infrastructure expansion and product innovation, NVIDIA is positioned for sustained hyper-growth.”

Analyst Interpretation and Market Implication

1. NVIDIA is operating at a scale no semiconductor company has ever reached.

$57bn quarterly revenue rivals the annual revenue of some global chipmakers. The company is capturing nearly all incremental global AI compute spending, with hyperscalers building “AI factories” around NVIDIA’s hardware, software, and networking ecosystem

2. Data Center leadership is widening.

Competitors (AMD, Intel, custom silicon) cannot match NVIDIA’s full-stack approach:

• hardware (GPU, DPU, NIC)
• software (CUDA, TensorRT, Omniverse)
• networking (NVLink, Spectrum-X)
• systems (DGX, GB200, Rubin)
• cloud-scale ecosystem

3. AI cycle is accelerating, not slowing.

AI demand is exponential in both:

• training compute, and
• inference compute

NVIDIA benefits from both simultaneously.

4. Supply chain remains the only bottleneck

Despite massive wafer supply expansion (TSMC Arizona, Samsung, and HBM partners), demand remains structurally higher than supply.

5. Q4 guide suggests another blowout quarter as Blackwell scarcity continues.

Conclusion

NVIDIA Corp. delivered record Q3 FY26 results, anchored by explosive Data Center growth, strong profitability, and significant shareholder value creation. The company’s dominant AI ecosystem, robust balance sheet, and innovation across GPUs, DPUs, and AI infrastructure solidify its leadership position. With Q4 guidance pointing to further growth, NVIDIA remains a global leader in AI compute and industrial-scale computing, well-positioned to sustain momentum into FY27.