Last Update 19 Nov 25
Fair value Increased 11%Another strong financial results
1. Latest Financial Results
Numbers at a glance:
• For the quarter ended Oct 26 2025 (Q3 FY26), NVIDIA reported revenue of US$57.0 billion, up ~22% quarter-on-quarter and ~62% year-on-year. 
• Diluted EPS (GAAP and non-GAAP) was US $1.30, up ~20-24% q-o-q and ~59-67% y-o-y. 
• Gross margin (GAAP) ~73.4%, (non-GAAP) ~73.6%. Slightly down vs. a year ago. 
• Data-Centre segment (the big one) revenue was US $51.2 billion, up ~25% q-o-q and ~66% y-o-y. 
• For Q4 FY26 outlook: NVIDIA expects ~US $65 billion in revenue (+/- 2%), with gross margin ~75%. 
• Share repurchases & dividends: First nine months of FY26, the company returned ~$37 billion to shareholders, and still has ~$62.2 billion remaining in its share-repurchase authorisation. 
Key take-aways
• Strong beat vs. consensus: Revenue & EPS beat expectations. 
• Remarkable growth, especially in Data Centre: the foundation of the AI infrastructure story.
• Guidance is elevated: The next quarter’s target is ahead of many analysts’ estimates.
• Margins still very high though slightly compressed y-o-y: This signals the business is very profitable but not immune to cost/mix pressure.
• Shareholder returns remain robust: the buyback program and dividend show capital discipline and an effort to return capital.
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2. Implications for Valuation
Given these results, how should we think about the valuation of NVDA today? Here are key considerations from a veteran institutional lens.
Growth assumption
NVIDIA is clearly executing in the high-growth AI infrastructure segment. Year-on-year growth of ~62% overall and ~66% in the core data centre business is exceptional. If one expects this growth rate to moderate over time (as is realistic), we must adjust valuation models accordingly.
Margin sustainability and scale
Even at this scale (~$57B revenue in a quarter = ~$230B on an annualised basis), margins remain notably high (~73-75%). This suggests a strong competitive advantage (pricing power, product leadership). Sustaining this margin will be key — any erosion could compress valuation.
Valuation multiples
Given such a growth profile + margin leverage, a “growth premium” multiple is warranted. However, there are the following risks:
• The business is now very large; maintaining double-digit growth becomes harder.
• Market already embeds high expectations for AI demand; any disappointment may trigger valuation compression.
• Business concentration and supply chain/geopolitical risks (e.g., export controls, large customers) must be factored.
Rough valuation sketch
(These are hypothetical numbers for framework illustration, not a recommendation)
• If we assume EPS will be say $4.61 next year and we assign a forward P/E of, say, 50× (reflecting high growth + margin). That yields a share value of $230.
• If growth remains higher (say 60-70% for multiple years), one could justify even higher multiples (60-70×) → then theoretical valuation ~$276-322 range.
• On the other hand, if growth decelerates faster, margins erode, or competitive dynamics intensify, the market might demand a lower multiple (30-40×) → share value ~$138-184.
Current market context
At the time of writing, the market may have already priced a large part of this growth. The margin for error is small. Good news may already be “in the price,” which means valuation hinge-points become:
• Execution vs. guidance (can they hit/surpass the $65B next quarter)
• Sustaining demand, scaling production, avoiding bottlenecks
• Macro/geopolitical risks (e.g., export controls, supply shortages)
• Competitive disruption (others entering the AI chip market)
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3. Conclusion
NVIDIA’s latest results are exceptional; they show the company is operating at the top of its game in a high-growth secular trend (AI infrastructure). The raised guidance reinforces the “moat” narrative and execution competence. From a valuation standpoint, the company merits a premium multiple, but that premium is justified only if growth remains strong and the margin advantage persists.
In effect, the valuation is “priced for perfection”, meaning the bar is high. If you’re comfortable with that bar and the risks, NVDA offers strong upside. If you’re more cautious, now might be a time to hold with a watchful eye or wait for a more attractive entry point.
1. The Backbone of the AI Revolution
NVIDIA is not just a chipmaker. It’s the platform that powers modern AI.
- Data Center Revenue: Now >70% of total revenue — and growing like a caffeinated cheetah.
- GPUs (H100, A100, B100 coming): The gold standard for training LLMs like GPT, Gemini, Claude, and more.
- CUDA Ecosystem: Proprietary software stack that locks in developers. Think of it like Apple’s App Store but for AI researchers.
- NVLink, DGX Systems, and NVDA Networking (Mellanox): They’re not just selling chips; they’re selling the whole AI infrastructure.
You don’t build AI models today without NVIDIA gear — it’s like trying to cook without a kitchen.
2. Core Gaming: Still a Money Printer
Even with AI hogging the spotlight, gaming is still a $12B+/year business for NVIDIA.
- RTX series GPUs: Leading-edge graphics for PC gaming.
- DLSS, Ray Tracing, Reflex: They’re not just pushing pixels — they’re innovating the entire gaming pipeline.
- Esports, VR, and 4K gaming keep GPU demand sticky and refresh cycles humming.
Gamers may whine about prices, but they still buy — like moths to a ray-traced flame.
3. Platform Expansion: Omniverse, Robotics, Automotive
NVIDIA is planting flags in emerging trillion-dollar fields:
- Omniverse: The industrial metaverse (not the Zuckerberg one) — digital twins, simulations, and AI-powered design.
- Drive & Automotive: Tesla who? NVIDIA chips are being used in hundreds of vehicle models for autonomy and infotainment.
- Robotics & Edge AI: Jetson platform used in drones, factories, and edge devices.
They’re turning silicon into software-defined solutions — and monetizing the whole stack.
4. Financial Firepower
Let’s talk numbers that make accountants giggle:
- Gross margin: ~75% (hello, software-like margins in hardware).
- EPS growth (YoY): Up triple digits — no, that’s not a typo.
- Free Cash Flow: Over $25B/year and rising.
- Zero long-term debt: Yep. The company could buy a small nation in cash.
And yes, they’re buying back shares, making that EPS number even juicier.
5. Risks (Because Nothing Goes Up Forever)
- Supply chain strain: Demand is white-hot, and fabs (mainly TSMC) can only move so fast.
- Customer concentration: Amazon, Microsoft, Meta, Google — big buyers, big leverage.
- Geopolitical tension: U.S.-China tech trade war could kneecap overseas sales.
- Valuation: Forward P/E ~50–60x. You’re paying for perfection — and the market has zero patience for missteps.
But hey — you’re not buying NVDA because it’s cheap. You’re buying because it’s dominant.
Investment Thesis Summary
NVIDIA isn’t just riding the AI wave — it built the surfboard, owns the beach, and sells sunscreen. With a wide moat powered by proprietary hardware, exclusive software, and first-mover scale, NVIDIA is as close to a pure-play on the AI industrial revolution as it gets.
This is one of the few companies where the term “next trillion-dollar opportunity” doesn’t sound delusional. The risk? Overhype. The reward? Potential market-shaping dominance for a decade.
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Disclaimer
The user oscargarcia has a position in NasdaqGS:NVDA. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
