Nvidia’s Q3 Earnings Trounced Expectations. Here’s Why Wall Street is Still Selling

Core Insights - Nvidia's stock experienced significant volatility, initially rising after earnings but ultimately declining nearly 3%, resulting in a $900 billion market swing within 36 hours [1][4]. Financial Performance - Nvidia reported Q3 fiscal 2026 revenue of $57 billion, exceeding consensus estimates by $1.8 billion, with a non-GAAP EPS of $1.3, beating estimates by $0.04 per share [2]. - Data Center revenue grew 66% year-over-year and 25% quarter-over-quarter, driven by demand for AI platforms, particularly the Blackwell architecture, which generated $51.2 billion in revenue against a consensus of $49.07 billion [2][4]. Market Sentiment and Trends - There is a growing concern about the sustainability of AI demand, with some investors questioning whether AI companies can generate earnings from their investments [7][10]. - The sentiment around AI has shifted, with notable figures in the industry suggesting the possibility of an AI bubble, contrasting with Nvidia's CEO's assertion of continued strong demand [11]. Inventory and Supply Chain - Nvidia's inventory increased from $10.08 billion in Q4 fiscal 2025 to $19.784 billion in Q3 fiscal 2026, raising concerns among some investors, although historical trends suggest this is typical [5][6]. Future Outlook - The debate continues on whether Nvidia's growth will slow, with bulls optimistic about long-term demand while bears predict a potential decline in the near term [10][13]. - Nvidia has a substantial backlog of $500 billion for 2025 and 2026, indicating strong future demand despite current market fluctuations [12].