Why Is Nvidia (NVDA) Down 3.6% Since Last Earnings Report?

It has been about a month since the last earnings report for Nvidia (NVDA). Shares have lost about 3.6% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is Nvidia due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the latest earnings report in order to get a better handle on the important catalysts.NVIDIA Q3 Earnings Beat Expectations, Revenues Increase Y/YNVIDIA reported better-than-expected third-quarter fiscal 2026 results. Third-quarter non-GAAP earnings of $1.30 per share surpassed the Zacks Consensus Estimate by 4.84%. The reported figure soared 60% year over year and 24% sequentially, mainly driven by higher revenues and effective cost management.NVIDIA’s fiscal third-quarter revenues climbed 62% year over year and 22% sequentially to $57.01 billion. The top line beat the consensus mark by 4.14%. Robust growth across all end markets drove NVDA’s third-quarter revenues to a record level.NVIDIA’s Segmental DetailsNVIDIA reports revenues under two segments — Graphics and Compute & Networking.The Graphics segment includes GeForce GPUs for gaming and personal computers, the GeForce NOW game-streaming service and related infrastructure. The segment also offers solutions for gaming platforms, Quadro GPUs for enterprise design, GRID software for cloud-based visual and virtual computing, as well as automotive platforms for infotainment systems.Graphics accounted for 10.7% of fiscal third-quarter revenues. The segment’s top line rose 51% year over year and 13% sequentially to $6.1 billion. The Zacks Consensus Estimate for fiscal third-quarter revenues in the Graphics segment was pegged at $5.65 billion.Compute & Networking represented 89.3% of fiscal third-quarter revenues. The segment comprises the Data Center platforms and systems for artificial intelligence, high-performance computing and accelerated computing.Compute & Networking revenues soared 64% year over year and 23% sequentially to $50.91 billion. The consensus mark for this segment’s third-quarter revenues was pinned at $48.59 billion.Top-Line Details of NVIDIA’s Market PlatformBased on the market platform, revenues from Data Center (89.8% of revenues) jumped 66% year over year and 25% from the previous quarter to $51.22 billion. This robust rise was mainly driven by higher shipments of the Blackwell GPU computing platforms that are used for the training and inference of large language models, recommendation engines and generative AI applications. The Zacks Consensus Estimate for this end market’s fiscal third-quarter revenues was pegged at $49.07 billion.Gaming revenues increased 30% year over year but declined 1% sequentially to $4.27 billion, accounting for 7.5% of the total revenues. The year-over-year jump reflects strong demand from gamers, creators and AI enthusiasts. Increased supply of Blackwell products also aided the segment’s sales growth during the reported quarter.However, the sequential decline was due to more normalized inventory levels across its channel partners ahead of the holiday season. The Zacks Consensus Estimate for the Gaming end market’s third-quarter revenues was pegged at $4.58 billion.Professional Visualization revenues (1.3% of revenues) increased 56% year over year and 26% sequentially to $760 million, driven by the launch of the new DGX Spark as well as the growth of Blackwell sales. The consensus mark for the Professional Visualization end market’s fiscal third-quarter revenues was pegged at $629 million.Automotive sales (1% of revenues) in the reported quarter totaled $592 million, up 32% on a year-over-year basis and 1% sequentially. The increase was mainly driven by continued adoption of self-driving platforms. The Zacks Consensus Estimate for the Automotive end market’s fiscal third-quarter revenues was pegged at $615 million.OEM and Other revenues (0.4% of revenues) were up 79% year over year and 1% sequentially to $174 million. The consensus mark for the OEM end markets’ fiscal third-quarter revenues stood at $156.9 million.NVDA’s Operating DetailsNVIDIA’s non-GAAP gross margin of 73.6% reflects a decline of 140 basis points year over year as Blackwell revenues consist primarily of full-scale datacenter systems compared to Hopper HGX systems last year. Sequentially, the non-GAAP gross margin improved 90 basis points as Blackwell ramped with an improved mix and cost structure.Non-GAAP operating expenses increased 38% year over year and 11% sequentially to $4.22 billion. The rise was primarily due to higher compensation and benefit expenses due to employee growth and compensation increases. However, as a percentage of total revenues, non-GAAP operating expenses declined to 7.4% from 8.7% in the year-ago quarter and 8.1% in the previous quarter.The non-GAAP operating income jumped 62% year over year and 25% sequentially to $37.75 billion. The non-GAAP operating margin of 66.2% declined 10 basis points year over year but improved 170 basis points from the previous quarter. NVIDIA’s non-GAAP net income margin of 55.7% for the third quarter contracted 130 basis points year over year but improved 50 basis points from the previous quarter.NVIDIA’s Balance Sheet and Cash FlowAs of Oct. 26, 2025, NVDA’s cash, cash equivalents and marketable securities totaled $60.6 billion, up from $56.8 billion as of July 27, 2025. As of Oct. 26, the total long-term debt was $7.47 billion, down from $8.46 as of July 27.NVIDIA generated $23.75 billion in operating cash flow during the third quarter and $66.53 billion in the first three quarters of fiscal 2026. NVIDIA generated free cash flow of $22.09 billion in the third quarter and $61.68 billion in the first three quarters of fiscal 2026.In the fiscal third quarter, the company returned $243 million to its shareholders through dividend payouts and repurchased stocks worth $12.46 billion. In the first three quarters of fiscal 2026, NVIDIA paid $732 million in dividends and bought back shares worth $36.27 billion.On Aug. 26, 2025, NVIDIA’s board of directors approved a new $60 billion share repurchase authorization.NVIDIA Initiates Q4 2026 GuidanceFor the fourth quarter of fiscal 2026, NVIDIA anticipates revenues of $65 billion (+/-2%). The non-GAAP gross margin is projected to be 75% (+/-50 bps). Non-GAAP operating expenses are estimated at $5 billion.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates revision.The consensus estimate has shifted 8.31% due to these changes.VGM ScoresCurrently, Nvidia has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock has a score of F on the value side, putting it in the lowest quintile for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Nvidia has a Zacks Rank #1 (Strong Buy). 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