NVIDIA (NVDA) Q3 FY26 Earnings Analysis: Strong Results vs. Mixed Sentiment & Key Risks

2025-11-27
2025-11-23 12:53:51 (EST)

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NVIDIA (NVDA) reported strong Q3 FY26 earnings ($57.0B revenue, +62% YoY; $31.9B net income) with robust Q4 guidance ($65B ±2% revenue) driven by data center growth (88.3% of FY2025 revenue) [0]. Despite record results, NVDA’s stock dropped to $178 post-earnings, prompting a Reddit discussion highlighting:

• Bearish Arguments
  : Macro factors (inflation/job data impacting GPU demand), customer concentration risk (33B from 4 customers), overvaluation concerns [User-provided Event Content].
• Bullish Arguments
  : Long-term profitability outlook (6 quarters of strong guidance), AI growth trajectory, analyst price targets ($220-$250/share) [User-provided Event Content].

External sources confirm NVDA’s customer concentration risk: 4 direct customers accounted for

(up from 36% YoY) [1].

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• NVDA’s stock price is $180.26 (1-day gain: +1.37%, 1-month loss: -5.86%) [0].
• Tech sector performance lags broader market (0.149% gain vs. Energy’s 1.76% gain) [0].

• Analyst consensus target of $250 (+38.7% upside from current price) [0].
• Gross margin pressure expected in near term (low-70s) due to Blackwell product ramp, with recovery to mid-70s by H2 2026 [0].

• YTD performance: +30.33% [0].
• Secular growth from AI adoption: NVDA dominates 90% of high-compute data center GPUs [1].

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Metric	Value	Source
Current Price	$180.26	[0]
P/E Ratio	44.21x	[0]
Net Profit Margin	53.01%	[0]
Customer Concentration	61% from 4 customers	[1]
Data Center Revenue Share	88.3% (FY2025)	[0]
Analyst Consensus Target	$250	[0]
Blackwell Gross Margin	Low-70s (ramp phase)	[0]

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• NVDA
  : Core subject of analysis.

• Semiconductors
  : Upstream suppliers (HBM/GDDR memory) face demand surges [2].
• Cloud Computing
  : AWS, Azure, Google Cloud (rely on NVDA GPUs for AI infrastructure) [0].
• OEMs
  : Foxconn, Super Micro (direct customers accounting for 61% of sales) [1].

• China
  : NVDA’s China revenue remains below pre-export control levels; Alibaba/ByteDance are relocating AI training to Southeast Asia to bypass US bans [3].

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• Identity of the 4 key customers (OEMs vs. end-users like cloud providers) [1].
• Exact impact of China export controls on long-term revenue (current China revenue share: ~13% of FY2025 total) [0].

• Bearish
  : Customer concentration risk (61% from 4 customers) and near-term gross margin pressure [1;0].
• Bullish
  : Secular AI growth, analyst upside (38.7%), and record Blackwell demand [0;0].

1. Blackwell ramp progress (gross margin recovery timeline).
2. Retention of top 4 customers.
3. China market access updates (export controls, local chip competition) [3].

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1. Customer Concentration
   :
   “Users should be aware that NVDA’s revenue concentration (61% from 4 customers) may significantly impact its financial performance if any of these key customers reduce orders or face operational issues.” [1]

2. Gross Margin Pressure
   :
   “This development raises concerns about near-term gross margin pressure as NVDA ramps its Blackwell product line, which warrants careful consideration for short-term investors.” [0]

3. Geopolitical Risk
   :
   “Historical patterns suggest that export controls and geopolitical tensions typically lead to revenue volatility for semiconductor companies, which users should factor into their analysis.” [3]

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Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Always conduct your own research before making investment decisions.