Nvidia’s Fiscal 2026 Financial Performance: What Happened

Nvidia continues to ride the AI wave hard. In its third quarter of fiscal 2026, the company reported a record $57.0 billion in revenue, up 62% year-over-year. That’s massive. Its Data Center business, the heart of Nvidia’s AI ambitions, pulled in $51.2 billion, a jump of 66% from a year ago and 25% quarter-on-quarter.

Earnings per share (EPS) came in at $1.30 (diluted), on both a GAAP and non-GAAP basis, which exceeded expectations. Gross margins were also strong, 73.4% (GAAP) and 73.6% (non-GAAP).

That’s not all. Nvidia is returning cash to shareholders. By the end of Q3, it had $62.2 billion left under its share buyback program.

When it comes to looking ahead, management sounds even more confident: for Q4, they’re projecting $65.0 billion in revenue, give or take 2%

What’s Driving the Growth

A lot of this comes down to demand for Blackwell GPUs, especially for data centers. In Q2, Blackwell Data Center revenue grew 17% sequentially. Nvidia says Blackwell Ultra production is “ramping at full speed,” and demand is “extraordinary.”

In addition to pure chip sales, Nvidia is pushing into complementary areas: networking (Spectrum-X), rack-scale computing (NVLink), and even industrial AI clouds in Europe. On the consumer/gaming side, its gaming business is also recovering: in Q2, gaming revenue was $4.3 billion, up both quarter-over-quarter and year-over-year.

But There Are Some Red Flags 

Alright, it’s not all smooth sailing. There are some real risks and warning signs:

1. China Exposure & H20 Chips 
   • Nvidia disclosed there were no H20 GPU sales to China in Q2.
   • This matters because export licensing restrictions are biting in Q1, Nvidia took a $4.5 billion charge tied to its H20 inventory and purchase obligations because demand to China dropped under the new regulation
   • Therefore, geopolitical risk is real: tighter export rules could crimp future sales, especially for certain high-performance chips.
2. Working Capital Concerns 
   • Some in the market worry about rising receivables (money owed to Nvidia) and inventory piling up.
   • If receivables grow faster than sales, it may mean customers are slow to pay.
   • Inventory buildup could hint at slowing demand or simply be a result of ramping more complex systems where deployment takes time.
3. Margin Pressure During the Transition 
   • While margins remain high, they have wobbled somewhat. In Q2, gross margin dipped slightly (ex-China H20 release), and some analysts think the ramp-up of Blackwell / Blackwell Ultra could be expensive.
   • There’s always a risk that the costs of scaling up new architectures could eat into profitability if not managed well.
4. Valuation Risks 
   • Nvidia is growing fast, but many worry its valuation already prices in a lot of future growth. If the growth narrative slows or if capital expenditure on AI infrastructure weakens, that could compress forward expectations.

How Bank of America Is Defending Nvidia 

Here’s where BofA comes in, and they’re not holding back.

• Bank of America’s analyst Vivek Arya says the recent pullback in Nvidia’s stock is mostly due to the market “misreading the numbers.”
• He points out that free cash flow (FCF) jumped sharply by +60% quarter-over-quarter to over $22 billion. That, in his view, is central to Nvidia’s true fundamentals.
• BofA isn’t too worried about the working capital issues:
  • On receivables, Arya notes that days sales outstanding (DSO) actually declined (meaning customers aren’t taking excessively long to pay).
  • On inventory: yes, inventory is building but BofA argues that’s because Nvidia is shipping very complex Blackwell-class platforms, which have long deployment cycles. That’s not necessarily a red flag; it could be a sign of scaling up.
• As for competition (say, from Google’s TPUs), BofA reassures clients that Nvidia’s GPUs remain deeply embedded across almost every cloud, and in most large language models. They argue Nvidia retains best-in-class performance per watt, making it hard to displace.
• BofA keeps a Buy rating on the stock, with a $275 price target.
• They also reset their longer-term forecasts: Arya’s team raised its non-GAAP EPS estimates for FY 2026, 2027, and 2028.
• Importantly, they argue that the “noise” around China restrictions is unhelpful but irrelevant to their near- and medium-term financial estimates.

Is Nvidia Stock Still Worth Buying?

Is it time to jump in? My take:

Yes, but only if you’re in this for the long game.

• The fundamentals are strong: record revenue, explosive data center growth, and huge cash generation.
• It’s not just selling chips: Nvidia is scaling up entire AI infrastructure (racks, networking, systems), which gives it a kind of “moat” that’s deeper than just GPU sales.
• BofA’s defense is compelling: if they’re right about FCF and future earnings, then recent dips could be buying opportunities, not red alerts.

But:

• The geopolitical risk with China is non-trivial. If export restrictions tighten, that could bite.
• Valuation is already high, so you’re not getting in at a dirt-cheap price. The upside is there, but so is the margin for disappointment.
• The ramp of Blackwell / Ultra is technically challenging; execution risk is real.

Final Words

This isn’t just another “beat-and-raise” quarter. If Nvidia nails this Blackwell ramp and delivers on the infrastructure side (not just chips), it’s not just riding AI, it’s architecting the AI future. It’s building the hardware backbone for next-generation reasoning AI, not just the training stuff.

At the same time, if some of the concerns (inventory, China, valuation) start to bite, the stock could become volatile. This is Nvidia at a crossroads: it could dominate, or it could hit a few speed bumps.

If I were advising someone, I’d say allocate, but don’t go “all in” blindly. Use a portion of your capital to ride the growth, but keep some powder dry just in case things swing the other way.