Nvidia (NVDA) Stock: Can Q3 Earnings Wednesday Revive the Struggling AI Rally
TLDR
- Nvidia’s spring 2023 revenue forecast was nearly double Wall Street estimates, launching the AI investment boom that added $3.5 trillion to its market value
- Skepticism about AI investments has grown as Meta Platforms fell 20% after announcing increased AI spending plans and Nvidia dropped 8% since late October
- CEO Jensen Huang projects approximately $500 billion in Blackwell and Rubin chip sales by end of 2026, though supply constraints may limit actual deliveries
- Options traders expect Nvidia stock to swing 6.2% in either direction after Wednesday’s earnings report, the largest predicted move in over a year
- Wall Street analysts forecast Q3 revenues of $54.79 billion and earnings of $1.25 per share, representing year-over-year growth of 56% and 54% respectively
Nvidia reports its third quarter fiscal 2026 earnings on Wednesday after market close. The timing matters more than usual.
The stock is up 42% this year but has fallen 8% since late October. The broader tech sector has cooled as investors question AI spending returns.
NVIDIA Corporation, NVDA
Meta Platforms dropped nearly 20% after its October 28 earnings call. Management announced plans to increase AI spending over the coming year.
The Magnificent Seven tech index has declined 5.8% since Meta’s report. The S&P 500 is tracking one of its worst November performances since 2008.
Wall Street expects Nvidia to report revenues of $54.79 billion for the quarter. That represents a 56% increase from the same period last year.
Analysts project earnings of $1.25 per share. That would mark a 54% jump year-over-year.
The company’s spring 2023 earnings report sparked the current AI investment wave. Nvidia’s revenue forecast came in at nearly double what analysts expected.
That moment showed the market AI’s potential scale. It helped drive the Nasdaq Composite up 88% to its late October record.
Growing Skepticism Tests Market Confidence
Investor doubts about AI returns have reached their highest levels since early 2023. Companies are spending billions on AI infrastructure with unclear profit timelines.
Oracle and CoreWeave have faced pressure in equity and credit markets. Both companies rapidly increased borrowing to expand AI data center operations.
Bank of America analyst Vivek Arya said Nvidia faces the challenge of meeting high earnings expectations while addressing AI spending skepticism.
Nvidia’s position differs from AI service providers or infrastructure builders. The company carries a double-A credit rating and expects to generate over $70 billion in net income this year.
CEO Jensen Huang told attendees at a tech event last month he expects to sell around $500 billion worth of Blackwell and Rubin chips through 2026. Supply constraints will likely prevent reaching that full amount.
Options traders are pricing in a 6.2% swing in either direction after the earnings release. That represents the largest expected move in more than a year.
China Sales and Chip Demand Under Watch
Nvidia cannot sell its top Blackwell chips to China under current export rules. Demand for adjusted versions designed for the Chinese market has been softer than expected.
Investors worry the White House may restrict sales of next-generation chips to China. Another concern is whether major customers might reduce data center plans or choose cheaper alternatives from Advanced Micro Devices.
Oppenheimer analyst Rick Schafer raised his price target to $265 from $225. He kept an Outperform rating based on extremely strong demand for AI chips.
Susquehanna analyst Christopher Rolland lifted his target to $230 from $210. He maintained a Buy rating and noted Blackwell Ultra chips could command 14% higher pricing.
Wedbush analyst Dan Ives said the earnings report will validate the AI revolution. He expects it to serve as a positive catalyst for tech stocks into year-end.
Gene Munster from Deepwater Asset Management sees a different scenario. Stronger guidance might amplify overspending worries while modest increases could signal faster-than-expected growth normalization.
Wall Street has 37 Buy ratings on Nvidia compared to one Hold and one Sell. The average price target of $240 suggests 28% upside from current levels.
Huang’s company has visibility into customer demand that few others possess. Nvidia already won the AI hardware race and maintains a panoramic view of customer activity.
The post Nvidia (NVDA) Stock: Can Q3 Earnings Wednesday Revive the Struggling AI Rally appeared first on CoinCentral.
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