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.