Nvidia announced better-than-expected quarterly results on Wednesday evening and released a guide that should impress even the most ambitious. The company’s third-quarter fiscal 2026 revenue rose 62% from a year earlier to $57.01 billion, beating the Street’s expectations of $54.92 billion, according to estimates compiled by data provider LSEG. Adjusted earnings per share for the three months ended Oct. 26 rose 67% to $1.30, beating consensus estimates of $1.25, according to LSEG data. NVDA YTD Mountain Nvidia YTD Talk about a strong performance. In addition to strong sales and bottom line results, management has pushed sales for the quarter to a level that not only exceeded consensus estimates, but also exceeded the so-called whisper numbers that were being talked about. For those unfamiliar with the term, the estimates cited by most market watchers and participants like the Club come from market data platforms like LSEG, FactSet, and Bloomberg. These forecasts are compiled from sell-side analysts working for banks and companies that sell research. But whisper numbers are thought to be what the buy side, the people who manage money such as hedge funds, asset managers and pension funds, are looking for. Sometimes it happens that a stock outperforms consensus estimates and misses the whisper number, resulting in a stock price decline. But beating Whisper’s numbers is a significant achievement, and it’s a very bullish sign, as expected, since it means the company is doing even better than the companies that are putting their money to work and putting the company at risk. Nvidia shares jumped 5% in after-hours trading to $196, a step in the right direction for the company’s record closing price of $207 on Oct. 29 and a market cap of $5 trillion. We reiterate our Hold equivalent rating of 2, but raise our price target on NVIDIA from $225 to $230 per share. Bottom Line Management not only knows about only about 100% of the revenue the Street is modeling for next year, but CEO Jensen Huang appeared to suggest on the conference call that the $500 billion figure he said in October has already increased. To help drive growth, Huang explained that the world is currently undergoing three computing transitions simultaneously. First, Huang said there is a shift from CPU-based general computing to GPU-based accelerated computing. (CPUs are central processing units and have long been considered the brains and workplace of traditional computers. GPUs are graphics processing units and are the heart and soul of AI workloads because they can complete many calculations simultaneously. That parallelism is a key advantage over CPUs.) Next, he said AI is at a “tipping point,” transforming existing applications and enabling new ones. “In existing applications, generative AI replaces traditional machine learning in search rankings, recommender systems, ad targeting, click-through prediction, content moderation, etc. – the very foundation of hyperscale infrastructure.” Third, he said, are so-called agent AI systems “that can reason, plan, and use tools.” (Agentic AI is a type of system that can complete tasks without human supervision; for example, it can not only search for flights, but also book them on your behalf.) Why we own it Nvidia’s high-performance graphics processing units (GPUs) are a key driver of the AI revolution, powering data centers that are rapidly being built around the world. But Nvidia isn’t just about hardware. Through Nvidia AI Enterprise services, Nvidia is building its software business. Competitors: Advanced Micro Devices and Intel Recent Purchases: August 31, 2022 Started: March 2019 At its core is Nvidia. “As you consider your infrastructure investments, consider these three fundamental dynamics, each of which will contribute to infrastructure growth in the coming years,” said Huang. “NVIDIA was chosen because our unique architecture enables all three transitions, so we can deliver AI across all industries, all phases of AI, all diverse computing needs in the cloud, and from cloud to enterprise to robotics, with one architecture.” It can accommodate all formats and modalities.” Commentary Going into the earnings print, we wanted to highlight five questions posed by Melius Research’s Ben Reitz for Huang to answer. CEOs and other company executives responded to four of the responses. Reitzes’ first question was whether the increase in capital spending would continue until the end of the decade. Time will tell, but it will depend primarily on end-market demand, which in turn will depend on whether Nvidia’s customers are able to monetize their spending. When it comes to demand, Huang got straight to the point during the earnings call, saying, “Blackwell’s sales are off the charts and cloud GPUs are selling out,” adding that “computing demand continues to accelerate and compound across training and inference, each growing exponentially.” (Blackwell is Nvidia’s current chip platform.) Another question Reitzes posed was, “What will Nvidia do with all its free cash flow?” Even though the company has already returned $37 billion to shareholders through the third quarter through dividends and stock buybacks this year, it’s clear that buybacks are still ongoing, as the company ended the quarter with $62.2 billion in stock buyback approvals remaining. In the call, Huang said that in addition to continued share buybacks, the cash will be used to fund further growth and make strategic investments. Nvidia has been on a tear with “strategic investment” after “strategic investment”, from a $100 billion multi-year investment and partnership with ChatGPT creator OpenAI to stakes in rival Claude creator Anthropic, Intel, and neocloud provider CoreWeave. The third question from Mr. Reitzes concerned the need for clarification on the $500 billion order for Blackwell and Next Generation Rubin, which Mr. Hwang mentioned at the company’s GTC conference last month. “We currently expect Blackwell and Rubin to generate $5 trillion in revenue from the beginning of this year through the end of the 2026 calendar year,” CFO Colette Kress said on the conference call. Now, Nvidia’s fiscal year is a little off. It’s almost a year away and ends in January. But assuming NVIDIA hits $212.8 billion in fiscal 2026, that’s the amount reported so far plus $65 billion from this quarter’s guidance. Just over $287 billion needs to be realized through most of fiscal year 2027, which also lasts about a month from the end of calendar year 2026. I know it’s confusing, but suffice it to say that NVIDIA already knows almost everything. That’s 100% of the sales Wall Street is looking for, but it will still take some time to generate more orders as corporate, consumer, and perhaps most attractive sovereign adoption increases. In fact, according to the conference call commentary, it appears that there have already been announcements of new orders that aren’t included in that $500 billion figure, and Kress said that the announced deal with the Kingdom of Saudi Arabia for 400,000 to 600,000 additional GPUs over three years is new, as is the recently announced deal with Anthropic. “So there’s definitely an opportunity to get more funding on top of the $500 billion that we announced,” Kress said. As for Reitz’s question about margins, it’s clear that management is guiding this quarter to better-than-expected levels and will maintain that in the short term. “As we head into fiscal 2027, input costs are trending upward, but we are working to maintain gross margins in the mid-70s,” Kress said. Exactly what Steet was looking for. One point in Wright’s question that Huang did not expand on was a comment the CEO made to the Financial Times earlier this month that “China will win the AI race.” At the time, Huang softened that statement in a statement, saying, “China is nanoseconds behind the United States in the field of AI,” adding that it was important for the United States to win by “staying ahead.” Although this specific investigation was not mentioned during the conference call, Huang said, “While we are disappointed in our current inability to ship more competitive data center computing products to China, we remain committed to continued engagement with the U.S. and Chinese governments and continue to advocate for America’s ability to compete globally.” Nvidia has said for some time that its future guidance includes zero sales from China. Segment Results Data Center, the largest of Nvidia’s five operating segments, reported a 66% year-over-year increase in revenue for the third quarter of fiscal 2026, beating expectations to $51.22 billion, and an impressive 25% quarter-over-quarter increase. Within the data center segment, computing revenue increased 56% to $43 billion and network revenue increased 162% to $8.2 billion. Revenue for the gaming division rose 30% to $4.27 billion, but fell short of expectations of $4.41 billion. Professional visualization sales increased by 56%. This was driven by increased sales of the company’s recently released DGX Spark, a Grace Blackwell-based AI supercomputer small enough to fit on a desk, and Blackwell. “Professional visualization has evolved into computers for engineers and developers, whether it’s for graphics or AI,” Kress said on the conference call. Automotive revenue grew 32% year-over-year as the industry continues to adopt Nvidia’s autonomous solutions. However, this number was below expectations. OEM and Other segment revenue increased 79%. This division of Nvidia covers partnerships with original equipment manufacturers, licensing, and other matters not considered in other segments. Guidance For the current fourth quarter of fiscal 2026, management’s outlook was significantly better than expected. Sales of $65 billion (plus or minus 2%) exceeded not only the LSEG consensus estimate of $61.66 billion, but also the $64 billion figure that had been whispered on Wall Street before the release. Adjusted gross profit margin is expected to be 75% plus or minus 50 basis points, higher than the 74.1% forecast compiled by FactSet. Expected adjusted operating expenses for the fourth quarter were $5 billion, broadly in line with expectations. (Jim Cramer’s Charitable Trust is long NVDA. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. 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