NVIDIA Poised for a Q3 Earnings Surprise: Buy Before the Beat?

NVIDIA Corporation NVDA is likely to beat on earnings when it reports third-quarter fiscal 2026 results on Nov. 19, after market close.The company expects revenues of $54 billion (+/-2%) for the quarter. The Zacks Consensus Estimate is pegged at $54.59 billion, which indicates a whopping 55.6% increase from the year-ago reported figure.The Zacks Consensus Estimate for quarterly earnings has remained unchanged at $1.23 per share over the past 60 days. This suggests year-over-year growth of 51.9% from the year-ago quarter’s earnings of 81 cents per share.Image Source: Zacks Investment ResearchEarnings of the graphics chip maker surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed in one, delivering an average surprise of 3.6%.NVIDIA Corporation Price and EPS Surprise NVIDIA Corporation price-eps-surprise | NVIDIA Corporation QuoteEarnings Whispers for NVIDIAOur proven model predicts an earnings beat for NVIDIA this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate ($1.26 per share) and the Zacks Consensus Estimate ($1.23), is +2.08%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.Zacks Rank: NVDA carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Factors Likely to Influence NVIDIA’s Q3 ResultsNVIDIA’s third-quarter top line is likely to have benefited from the continued strength in its Data Center business. The increasing adoption of cloud-based solutions amid the growing hybrid working trend is anticipated to have boosted demand for its chips across the Data Center end market. An increase in hyperscale demand and growing adoption in the inference market are likely to have acted as tailwinds in the to-be-reported quarter.The Data Center end-market business should have benefited from the growing demand for generative AI and large language models using GPUs based on NVIDIA Blackwell architectures. The strong demand for its chips from large cloud service and consumer internet companies is anticipated to have aided the segment’s top-line growth in the to-be-reported quarter. Our model estimate for Data Center’s third-quarter revenues is pegged at $48.04 billion, which indicates robust year-over-year growth of 56.1%.Moreover, NVIDIA’s third-quarter performance is likely to have benefited from the recovery across its Gaming and Professional Visualization end markets. The Gaming end market’s results have improved year over year in seven out of the last nine quarters, as inventory levels with channel partners have returned to normal. The company also registered strong demand across most regions for its gaming products. Our model estimate for the Gaming end market’s third-quarter revenues is pegged at $4.71 billion, which implies a 43.7% increase from the year-ago quarter’s level.NVIDIA’s Professional Visualization segment’s performance also reflected recovery, with revenues increasing in eight consecutive quarters. The trend is likely to have continued in the third quarter. Our model estimate for the Professional Visualization end market’s third-quarter revenues is pegged at $678.9 million, which suggests a 39.7% increase from the year-ago quarter’s figure.The company’s Automotive segment demonstrated an improvement in trends over the preceding six quarters. The positive trend is likely to have continued in the fiscal third quarter due to increasing investments in self-driving and AI cockpit solutions. Our model estimate for the Automotive end market’s third-quarter revenues is pegged at $624.8 million, which calls for year-over-year growth of 39.1%.NVIDIA Stock Price Performance & ValuationShares of NVIDIA have remained highly volatile over the past year. NVDA stock has gained 39.1% year to date, outperforming the Zacks Computer and Technology industry’s growth of 26.3%. However, the stock has also underperformed major semiconductor stocks, including Advanced Micro Devices AMD, Intel INTC and Broadcom AVGO. Shares of Advanced Micro Devices, Intel and Broadcom have surged 104.9%, 79.2% and 46.2%, respectively.NVIDIA YTD Price Return PerformanceImage Source: Zacks Investment ResearchNow, let’s look at the value NVIDIA offers investors at the current levels. NVIDIA is trading at a premium with a forward 12-month price-to-earnings (P/E) of 31.88X compared with the sector’s 29.08X, reflecting a stretched valuation.NVIDIA Forward 12-Month P/E MultipleImage Source: Zacks Investment ResearchCompared with other chip giants, NVDA trades at a premium against Advanced Micro Devices and Broadcom, while at a discount to Intel. Currently, Intel, Advanced Micro Devices and Broadcom trade at a forward P/E of 65.66X, 43.44X and 38.88X, respectively.Investment Consideration for NVIDIAOver the past year, NVIDIA’s revenue growth has been driven by robust demand for chips required for the development of generative AI models. NVIDIA dominates the market for generative AI chips, which have already proven useful across multiple industries, including marketing, advertising, customer service, education, content creation, healthcare, automotive, energy & utilities and video game development.The growing demand to modernize the workflow across industries is expected to drive the demand for generative AI applications. The global generative AI market size is anticipated to reach $967.65 billion by 2032, according to a new report by Fortune Business Insights. The market is expected to witness a CAGR of 39.6% from 2024 to 2032.The complexity of generative AI requires vast knowledge and immense computational power. This means that enterprises will need to significantly upgrade their network infrastructures. NVIDIA’s AI chips, including the A100, H100, B100, B200, B300, GB200 and GB300, are the top choices for building and running these powerful AI applications, positioning the company as a leader in this space. As the generative AI revolution unfolds, we expect NVIDIA's advanced chips to drive substantial growth in its revenues and market presence.Conclusion: Buy NVDA Stock for NowAs a leading player in the semiconductor industry, NVIDIA has benefited from its dominance in GPUs and strategic expansion into AI, data centers and autonomous vehicles. The company's strong product portfolio, leadership in AI and relentless innovation present a compelling investment opportunity.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Intel Corporation (INTC): Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks