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

Core Insights - Nvidia reported better-than-expected third-quarter fiscal 2026 results, with non-GAAP earnings of $1.30 per share, surpassing estimates by 4.84% and showing a 60% year-over-year increase [2][3] - Total revenues for the third quarter reached $57.01 billion, a 62% increase year-over-year and 22% sequentially, beating the consensus mark by 4.14% [3][6] Financial Performance - Non-GAAP gross margin was 73.6%, reflecting a decline of 140 basis points year-over-year but an improvement of 90 basis points sequentially [13] - Non-GAAP operating income increased by 62% year-over-year and 25% sequentially to $37.75 billion, with a non-GAAP operating margin of 66.2% [15] - Operating cash flow for the third quarter was $23.75 billion, with free cash flow of $22.09 billion [17] Segment Performance - The Graphics segment accounted for 10.7% of revenues, rising 51% year-over-year to $6.1 billion, exceeding the consensus estimate of $5.65 billion [5] - Compute & Networking revenues represented 89.3% of total revenues, soaring 64% year-over-year to $50.91 billion, surpassing the consensus estimate of $48.59 billion [6] - Data Center revenues, a significant part of Compute & Networking, jumped 66% year-over-year to $51.22 billion, driven by increased shipments of Blackwell GPU computing platforms [7] Market Insights - Gaming revenues increased by 30% year-over-year to $4.27 billion, although they declined 1% sequentially due to normalized inventory levels [8][9] - Professional Visualization revenues rose 56% year-over-year to $760 million, driven by new product launches [10] - Automotive sales totaled $592 million, up 32% year-over-year, reflecting the adoption of self-driving platforms [11] Shareholder Returns - Nvidia returned $243 million to shareholders through dividends and repurchased $12.46 billion in stocks during the third quarter [18] - The company has a new $60 billion share repurchase authorization approved by its board [18] Future Guidance - For the fourth quarter of fiscal 2026, Nvidia anticipates revenues of $65 billion (+/-2%) and a non-GAAP gross margin of 75% (+/-50 bps) [19] - The consensus estimate has shifted upward by 8.31% in the past month, indicating positive sentiment among investors [20] Investment Outlook - Nvidia holds a Zacks Rank 1 (Strong Buy), suggesting an expectation of above-average returns in the coming months [23]