Nvidia Q3 earnings: Why the setup for Nvidia is looking very good 'from multiple angles'

Core Insights - Nvidia has a significant backlog of booked business amounting to $500 billion for 2025 and 2026, indicating strong future revenue growth potential [2][3] - The company is expected to grow its data center revenues by nearly 20% sequentially each quarter until the end of 2026, which is not reflected in current consensus expectations [3][4] - Major customers like Amazon, Google, Microsoft, and Meta are planning substantial capital expenditures that align with Nvidia's growth trajectory [4] Supply Chain Considerations - Potential supply bottlenecks exist in GPU manufacturing, particularly concerning high-volume memory and packaging, but Nvidia has worked to secure supply [5][6] - Issues related to AI shell rollouts are currently isolated and not expected to significantly impact Nvidia's largest customers due to their diversified partnerships [6] - Power supply concerns are mitigated by efficiencies throughout the supply chain, suggesting no major supply issues for 2026 [7] Stock Performance Outlook - Despite a 40% increase in stock value this year, Nvidia's stock has historically declined after earnings beats, indicating high expectations [8] - If Nvidia delivers on its booked business, earnings could approach $9 next year, with the stock currently trading at low 20s multiples [9] - Visibility into future growth is strong, with Amazon planning to double its data center footprint by 2027, suggesting continued optimism beyond 2026 [10] Long-term Investment Landscape - The global economy has the capacity to absorb over $3 trillion in data center capital expenditures, with current spending at half a trillion for the top four hyperscalers [13][14] - There is potential for global data center spending to grow tenfold by 2035, provided productivity gains continue [15] - Concerns about potential margin compression and investment slowdowns exist, but the overall outlook remains positive for the data center sector [15] Market Sentiment - Recent sales of Nvidia shares by Soft Bank and Peter Thiel have raised questions, but these moves are seen as reallocating investments rather than a negative signal for Nvidia [16][17]