NVIDIA (NVDA) Q3 2025 Earnings Analysis: Business Strength vs Valuation Debate

NVIDIA’s Q3 2025 earnings delivered record results: $57B revenue (62% YoY), $31.8B net income, and $1.30 EPS (60% YoY) [0]. The company guided for $65B next-quarter revenue with a 75% gross margin [0]. However, the stock declined 14.75% over the past month due to Meta evaluating Google’s TPUs as an alternative to NVIDIA’s GPUs [1]. This competition risk is amplified by Google’s TPUs being 2x cheaper than NVIDIA’s offerings [2]. The data center segment, which accounts for 88.3% of revenue [0], faces growing threats from Google and AMD.

1. Narrative vs Fundamentals
   : Reddit discussions highlight a gap between market narratives (AI hype vs price concerns) and fundamentals—NVIDIA’s strong margins (53.01% net profit) and $350B backlog [1] contrast with recent stock volatility.
2. Competition Impact
   : Meta’s potential switch to Google TPUs could reshape the AI hardware landscape, as NVIDIA’s market share dominance is challenged by cost-effective alternatives [2].
3. Valuation Discrepancy
   : While Reddit mentions a 26x forward P/E for FY2027, current P/E is ~43x [0], indicating market uncertainty about long-term growth sustainability.

• Competition
  : Google TPUs and AMD chips threaten NVIDIA’s market share [1,2].
• Valuation
  : High P/E (~43x) may be unsustainable if growth slows [0].
• Customer Retention
  : Loss of major clients like Meta could impact revenue [1].

• Buying Window
  : Recent stock decline may present an entry point for investors confident in fundamentals [0].
• Strong Backlog
  : $350B unfulfilled orders signal long-term demand [1].
• Margin Expansion
  : 75% gross margin guidance reflects pricing power [0].

Critical metrics:

• Revenue: $57B (YoY +62%) | EPS: $1.30 (YoY +60%) [0]
• Market Cap: $4.3T | P/E Ratio: ~43x [0]
• Analyst Target: $250 (+41.6% upside) | Buy Rating:73.4% [0]
• Data Center Segment:88.3% of revenue | Net Profit Margin:53.01% [0]
• Next-Quarter Guidance: $65B revenue |75% gross margin [0]