Key Points
- NVIDIA's Q3 release and guidance update indicated that the AI trade is still alive, with the industry larger and growing faster than anticipated.
- Revenue growth is accelerating, and forecasts for 2026 suggest analyst estimates are as much as 100% too low.
- Analysts are lifting their targets, pointing to a steep price increase over the next 12 months.
If there were any doubts about the AI trade and its health ahead of NVIDIA’s (NASDAQ: NVDA) Q3 earnings release, they have been laid to rest. The company produced another wow-quality quarter, accelerating revenue growth to over 60% annually and outpacing consensus estimates.
NVIDIA's mind-bending outperformance indicates the AI bubble is bigger and growing faster than anticipated. The company’s Q4 guidance was $3 billion above MarketBeat’s reported consensus, nearly 500 basis points, and it is likely to outperform due to the trends. CEO Jenson Huang said GPUs and GPU capacity are sold out, and there is clear visibility through the end of the following calendar year.
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NVIDIA's Outlook for 2026: Analyst Forecasts Are Too Low
Looking forward, NVIDIA expects about $500 million in Blackwell and Rubin revenue over the next five quarters, including the current quarter. That figure is more than 60% higher than the consensus forecast for the year—and that’s without accounting for contributions from other business segments.
The Q3 results showed strength across the board, with double-digit growth in all segments, showcasing the company's broad-based momentum.
In this light, NVIDIA’s 2026 analyst forecasts may be as much as 100% off the mark, a disparity that could push the market for the stock to record levels.
The analyst community was swift to respond. MarketBeat tracked nine price target revisions within the first 12 hours of the release, and all are bullish for the market.
Although there were no formal upgrades (given that nearly 94% of ratings already sit at Buy or higher), there were multiple price target increases and reaffirmations.
The consensus rating forecasts a 30% upside relative to the pre-release closing price, while the average of the new targets points to an upside that could be much higher. The average forecast updated after the earnings drop is currently $262, with the high-end at $350.
Notably, both low-end and high-end targets are trending higher, indicating a broad movement supported by a significant portion of the market. A rise to the high-end range would equate to a nearly-100% upside from pre-earnings levels.
Institutional activity remains a key driver of NVIDIA stock. This group owns a significant 65% of the stock, and despite increased selling activity in early Q4, the group has been robustly bullish throughout the year. Institutions are expected to revert to buying in the back half of Q4 now that the results are in.
NVIDIA’s Balance Sheet and Shareholder Value Swell
NVIDIA’s financial strength adds another layer of confidence. The company’s revenue surge triggered a significant increase in leverage, driving robust margins, cash flow, and profits. Earnings per share, which significantly outperformed consensus estimates, is forecasted to grow in 2026, along with revenue.
The company's balance sheet is notably strong. NVIDIA is net cash positive, and its cash pile grew by 40% year-to-date to over $60 billion. Although its dividend yield remains modest at 0.05%, share repurchases have been meaningful—cutting the share count by 1% in Q3—and are likely to continue.
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NVIDIA Trigger Buy Signal
Technically, the stock had appeared vulnerable ahead of the Q3 release—with indicators like candles, MACD, and stochastic all indicating a potential top. However, NVIDIA’s strong earnings acted as a catalyst for a new buy signal. Shares jumped more than 5% in premarket trading, finding support at key trend levels. With favorable long-term trends and strong fundamentals, NVIDIA stock remains well-positioned to benefit from the accelerating AI cycle.
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