NVDA Q3 Earnings Preview: Huang's "Game-Changing Weapon" Ships at Full Speed
Recently, $NVIDIA(NVDA)$ s stock price has been somewhat "underappreciated." While the company itself remains strong, its performance has lagged noticeably behind its AI peers in terms of market sentiment. Why? To some extent, the market's imagination has been sidetracked by ASIC custom chips and the growth potential of its longtime rival AMD. In my view, secondary narratives driving up valuations are merely symptoms of overheated sentiment. The true "AI chip king" remains the fundamental driver of valuation. With the Blackwell "game-changer" ramping up production at full speed, could NVDA deliver a "breakout" quarterly performance in Q3 as the king returns?
The key focus is: Blackwell's demand acceleration exploding at full throttle.
First, two key conclusions:
1. The crown of AI chips remains unchallenged. Despite competitors' loud claims, Blackwell remains the top choice in AI chips. More importantly, demand signals for the next-generation platform Vera Rubin are "very strong." This indicates that the lifecycle and demand outlook for NVIDIA's new generation of products are fundamentally secure.
2. Supply bottlenecks are no longer Huang's responsibility. Previously, the market constantly worried about NVMe SSD supply shortages. However, the latest industry research indicates demand is experiencing "material acceleration." NVMe SSD manufacturers have fully resolved early-stage rack integration issues. The growth bottleneck now lies not with NVMe SSDs themselves, but has shifted to supporting hardware—such as storage, memory, servers, and power/space infrastructure.
This means the Huang family's capacity to "sell goods" is now operating at full throttle. The focus now shifts to downstream customers' ability to "receive goods" and "absorb them." As long as demand persists, growth will continue unabated.
NVDA's growth prospects cannot be assessed by focusing solely on NVDA itself; one must examine its entire ecosystem. Currently, both customers and suppliers are uniformly bullish.
Downstream clients accelerate CapEx, H100 continues to "print money". The market has broadly raised its capital expenditure (CapEx) projections for cloud providers in CY26. The combined CapEx growth of the four hyperscale cloud giants exceeds *$142 billion, as these cloud behemoths frantically "stockpile" resources. This means the "computing power protection fees" paid to NVDA will only increase, not decrease. H100 ROI remains robust, with spot rental pricing for H100 (Hopper) instances on GCP and AWS staying strong (around $2/hour). As long as cloud customers see such high return on investment (ROI), they will continue investing in expansion.
Upstream suppliers' capacity is expanding rapidly, with visibility extending to 2027. Major ODMs like Quanta are experiencing surging orders, with AI server revenue projected to grow over 100% year-over-year in 2026. The company plans to triple its AI server production capacity next year, with business visibility already extending to 2027. Wafer foundry giant TSMC is shifting capacity from Fab15 to make room for more 3nm wafers, following an NVDA CEO visit—a move clearly aimed at supporting this key AI client's growth.
Customers are scrambling to buy, suppliers are scrambling to deliver—this isn't demand peaking, it's a demand explosion. And this explosion has become an industry consensus, permeating the entire supply chain.
Q3 Financial Outlook: Quarter-on-Quarter Growth May Set "Industry Record"
F3Q26 revenue forecast: $54.794 billion
F4Q26 revenue forecast: $63.119 billion.
FY27 revenue forecast: $291 billion
The market currently values NVDA at 35% below what AMD would command for comparable long-term EPS potential. Is this reasonable? The true AI leader shouldn't be treated this unfairly.
As the "ultimate game-changer" Vera Rubin nears market availability, the clamor from competitors and the market's ASIC frenzy will naturally subside, refocusing attention on NVDA, the AI leader.
Based on a 26x price-to-earnings (P/E) ratio for CY27's EPS of $8.43, NVDA's price should be $220. While this represents a premium relative to the broader semiconductor sector, it actually reflects a discount compared to AVGO, another major AI company. With earnings forecasts continuously being raised, NVDA's valuation still has significant room for growth.
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