Nvidia (NVDA) reported $57B in Q3 revenue and beat estimates by $1.8B.
Nvidia has a $500B backlog for 2025 and 2026.
Data Center revenue grew 66% year-over-year to $51.2B.
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Nvidia (NASDAQ:NVDA) reported blockbuster earnings in Q3, with many believing that the report was enough to put an end to the “market crash” or the “AI bubble myth.” NVDA and many other related AI stocks did start gaining significantly pre-market and in the early hours, but the rose-tinted glasses didn’t take long to fall off.
Investors are not worried about just Nvidia, but AI as a whole. We’ll look at it in depth, alongside whether or not you should buy the dip on NVDA stock.
But first, let’s take a look at Nvidia’s stellar Q3 fiscal 2026 metrics before we make a judgment on whether or not selling the stock due to macro and technical issues makes sense.
Nvidia posted $57 billion in Q3 revenue and beat consensus estimates by $1.8 billion. Non-GAAP EPS of $1.3 also beat estimates by $0.04 per share. The company’s Data Center segment was vindicated after posting $51.2 billion in revenue compared to the $49.07 billion consensus. This translates to a 4.3% beat, thanks to demand for Blackwell’s AI platforms. Graphics did well, too, with $6.1 billion in revenue vs. $5.65 billion expected.
Data Center revenue grew 66% year-over-year and 25% quarter-over-quarter. Nvidia attributed this to “accelerated computing, powerful AI models, and agentic applications,” saying “Blackwell Ultra is now our leading architecture across all customer categories while our prior Blackwell architecture saw continued strong demand. H20 sales were insignificant in the third quarter of fiscal year 2026.”
Operating cash flow increased from $50.789 billion to $77.107 billion from Q3 fiscal 2025. Gross margins have remained stunted, declining 1.2% year-over-year.
Nvidia got a huge boost immediately after the release and during the early hours. However, NVDA stock undid all those gains and then some. It is now down nearly 3% as of this writing. This is a $900 billion swing within 36 hours. Not only that, high-beta stocks in the AI space rallied with Nvidia during the early hours and then tanked in parallel.
So why didn’t Nvidia’s Q3 blockbuster “save the market”?
The answer lies mostly in macros and technicals, instead of anything wrong with Nvidia’s fundamentals. Some investors do point out that Nvidia’s inventories have surged. Inventories were $10.08 billion in Q4 fiscal 2025 and increased to $19.784 billion in Q3 fiscal 2026.
Nevertheless, it’s not that worrying when you look at Nvidia’s historical inventory trend. Inventories tend to rise and fall with revenue, and CEO Jensen Huang still stated that this was to stockpile supply to meet demand and commitments.
The primary reason seems to be a broad-based decline in excitement surrounding AI. The argument is that if AI companies cannot derive earnings from their AI models and are seeing diminishing returns from pouring hundreds of billions into these models, Nvidia’s source of revenue could fade.
This argument has been made for years, but the market is taking it more seriously as hyperscalers have shown balance sheet deterioration. For instance, Meta Platforms (NASDAQ:META) had a large net cash position of $44.6 billion at the end of 2019. In Q3 2025, it had $6.6 billion more in debt than cash. Reality Labs is to blame for this partially, but the AI build-out has been the most significant factor behind cash balances declining.
I’ll admit that most hyperscalers still have a net cash position, but it is unlikely that they can continue spending more and more on building data centers.
A slowdown is a matter of when, not if. The bulls are betting that it will take years, or even decades, before Nvidia starts to mature. Bears believe that AI demand is about to wear off in a few quarters or less. No one knows when exactly, but there’s a dichotomy inside the companies themselves.
Google’s (NASDAQ:GOOG, NASDAQ:GOOGL) CEO Sundar Pichai recently implied that there is an AI bubble, with OpenAI CEO Sam Altman implying the same a few months before. Huang rejected the premise of an AI bubble, as demand is still strong from his perspective. Demand could slow down sharply if hyperscalers like Google start leaning more into their own chips, which they are in the process of doing.
At the same time, Huang revealed that Nvidia had a $500 billion backlog for 2025 and 2026.
NVDA stock is unlikely to crater overnight, but demand can decline faster than bulls expect. So far, there are no signs that hyperscalers are reducing their CapEx for the AI build-out. But as depreciation rises and net cash becomes negative, they may have to do so. Demand for Nvidia’s GPUs will fall accordingly. This is a speculative scenario, as the fundamentals show Nvidia is booming, with hyperscalers on course to expand their data center expenditures further.
If you are significantly in the green, it can be a good idea to take some profits from NVDA stock and put it in some defensive and dividend stocks. However, the fundamentals are still in Nvidia’s favor. The rally can easily continue for two or more quarters as there’s sufficient cash in Nvidia’s customers’ coffers to keep the top line booming for more.
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