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NVIDIA's Data Center revenues surged 117% to $89 billion, while Q3 gross margin is expected near 74%
NVIDIA returned $26 billion to shareholders and trades at a 17.87 forward P/E versus its industry's 21.15
NVIDIA Corporation (NVDA - Free Report) is set to report fiscal third-quarter 2027 earnings on Nov. 17, after market close. Investors are assessing its strong artificial intelligence (AI)-driven growth prospects against leadership issues and stock market volatility.
The key question is: Can NVIDIA’s strong fundamentals and positive outlook outweigh the leadership turmoil and maintain investor confidence, potentially creating an appropriate buying opportunity amid the recent stock weakness? Let’s explore.
NVIDIA’s Strong Q3 Outlook Signals Sustained Growth Momentum
After an exceptionally strong second quarter of fiscal 2027, NVIDIA expects momentum to continue, driven by robust demand across its AI infrastructure ecosystem and broader customer adoption. NVIDIA expects revenues of $108 billion, plus or minus 2%, in the fiscal third quarter, which implies around 12.3% growth over the fiscal second quarter, according to the company’s Aug. 26 press release.
The Data Center business will remain the primary growth engine in the fiscal third quarter, driven by the Vera Rubin platform entering full production and deployments ramping across major cloud partners. Data Center revenue reached $89 billion in the fiscal second quarter, up 117% year over year and 18% sequentially.
At the same time, NVIDIA’s gross margins are expected to remain healthy at around 74% in the fiscal third quarter, after holding at 75% in the fiscal second quarter, indicating the company will continue to reflect pricing strength and demonstrate operational efficiency.
NVIDIA: Leadership Concerns Create a Buying Opportunity
NVIDIA has provided a strong fiscal third-quarter outlook, which, in all probability, the company may achieve, driven by robust AI demand. Its continued Data Center expansion and the Vera Rubin ramp are expected to boost its growth trajectory and provide a positive catalyst for the stock.
Moreover, NVIDIA returned approximately $26 billion to shareholders during the fiscal second quarter, reflecting its ability to generate substantial cash, enhancing investors’ confidence and supporting long-term stock growth.
However, ahead of the much-awaited earnings results, NVIDIA’s stock is facing mounting pressure amid controversy surrounding its CEO, Jensen Huang, following allegations of his affair with a Chinese spy and reports of his stepping down.
No doubt, Huang’s leadership and expertise will be missed, but the fate of NVIDIA is not entirely dependent on one individual. Anyhow, Huang’s relatively small ownership stake eases key-person risk over the long term, helping NVIDIA sustain its growth trajectory. Also, uncertainty over succession can create panic among investors and trigger selling pressure. However, the board’s decision to announce CFO Colette Kress as interim CEO should instill confidence among investors.
Thus, NVIDIA’s strong outlook, cash-generating ability and leadership continuity certainly make a compelling case to consider the stock as a long-term investment. In fact, the recent weakness does offer investors an attractive entry point and a chance to buy the stock at a lower valuation. NVIDIA has a forward price-to-earnings (P/E) ratio of 17.87 compared with the Semiconductor - General industry’s 21.15.
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Boardroom Drama Ahead of NVIDIA's Q3 Earnings: Buy or Sell the Stock?
Key Takeaways
NVIDIA Corporation (NVDA - Free Report) is set to report fiscal third-quarter 2027 earnings on Nov. 17, after market close. Investors are assessing its strong artificial intelligence (AI)-driven growth prospects against leadership issues and stock market volatility.
The key question is: Can NVIDIA’s strong fundamentals and positive outlook outweigh the leadership turmoil and maintain investor confidence, potentially creating an appropriate buying opportunity amid the recent stock weakness? Let’s explore.
NVIDIA’s Strong Q3 Outlook Signals Sustained Growth Momentum
After an exceptionally strong second quarter of fiscal 2027, NVIDIA expects momentum to continue, driven by robust demand across its AI infrastructure ecosystem and broader customer adoption. NVIDIA expects revenues of $108 billion, plus or minus 2%, in the fiscal third quarter, which implies around 12.3% growth over the fiscal second quarter, according to the company’s Aug. 26 press release.
The Data Center business will remain the primary growth engine in the fiscal third quarter, driven by the Vera Rubin platform entering full production and deployments ramping across major cloud partners. Data Center revenue reached $89 billion in the fiscal second quarter, up 117% year over year and 18% sequentially.
At the same time, NVIDIA’s gross margins are expected to remain healthy at around 74% in the fiscal third quarter, after holding at 75% in the fiscal second quarter, indicating the company will continue to reflect pricing strength and demonstrate operational efficiency.
NVIDIA: Leadership Concerns Create a Buying Opportunity
NVIDIA has provided a strong fiscal third-quarter outlook, which, in all probability, the company may achieve, driven by robust AI demand. Its continued Data Center expansion and the Vera Rubin ramp are expected to boost its growth trajectory and provide a positive catalyst for the stock.
Moreover, NVIDIA returned approximately $26 billion to shareholders during the fiscal second quarter, reflecting its ability to generate substantial cash, enhancing investors’ confidence and supporting long-term stock growth.
However, ahead of the much-awaited earnings results, NVIDIA’s stock is facing mounting pressure amid controversy surrounding its CEO, Jensen Huang, following allegations of his affair with a Chinese spy and reports of his stepping down.
No doubt, Huang’s leadership and expertise will be missed, but the fate of NVIDIA is not entirely dependent on one individual. Anyhow, Huang’s relatively small ownership stake eases key-person risk over the long term, helping NVIDIA sustain its growth trajectory. Also, uncertainty over succession can create panic among investors and trigger selling pressure. However, the board’s decision to announce CFO Colette Kress as interim CEO should instill confidence among investors.
Thus, NVIDIA’s strong outlook, cash-generating ability and leadership continuity certainly make a compelling case to consider the stock as a long-term investment. In fact, the recent weakness does offer investors an attractive entry point and a chance to buy the stock at a lower valuation. NVIDIA has a forward price-to-earnings (P/E) ratio of 17.87 compared with the Semiconductor - General industry’s 21.15.
Image Source: Zacks Investment Research
NVIDIA currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.