Datacenter and AI Chip Demand to Boost NVIDIA's Q3 Earnings

NVIDIA Corporation NVDA is set to report its third-quarter fiscal 2026 earnings on Nov. 19, and expectations are high.

As the undisputed leader in artificial intelligence (AI) computing, NVIDIA has been at the center of the AI boom, with its high-performance datacenter graphics processing units (GPUs) fueling growth across industries. With demand for AI infrastructure still climbing and businesses committing more capital to generative AI, NVIDIA is likely to post another strong quarter.

What to Expect From NVIDIA’s Q3 Results?

NVIDIA expects third-quarter fiscal 2026 revenues to reach $54 billion (+/-2%), underscoring the broad-based strength of AI adoption. This represents a remarkable leap from prior years, as more businesses allocate significant capital toward AI-driven growth initiatives. The Zacks Consensus Estimate is pegged at $54.62 billion, which indicates a whopping 55.7% increase from the year-ago reported figure and a rise of 16.9% sequentially.

The consensus mark for third-quarter earnings is pegged at $1.24, implying a year-over-year surge of 53.1% and sequential growth of 18.1%. It surpassed the Zacks Consensus Estimate for earnings three times in the trailing four quarters while missing on one occasion, the average surprise being 3.6%.

Click here to know how NVDA’s overall fiscal third-quarter results are likely to be.

Datacenter: Key Growth Driver for NVIDIA

NVIDIA’s datacenter business has been a major reason for its recent growth. In the second quarter of fiscal 2025, the segment grew 56% year over year and 5% sequentially to $41.1 billion.

This strong trend is expected to continue. Our model projects third-quarter datacenter revenues to hit $48.04 billion, indicating an approximately 56.1% year-over-year increase and a 16.9% sequential rise. This growth projection is mainly because companies and cloud providers are investing heavily in AI, and they rely on NVIDIA’s GPUs to build and run AI systems.

NVIDIA’s latest chip designs, Hopper, Ampere and Blackwell, are powering many AI applications, from training large models to providing quick responses in real time. Big tech companies like Microsoft, Amazon and Google continue to use NVIDIA chips in their AI products and services, helping keep demand high.

AI Demand: Strong Catalyst for NVIDIA’s Growth

The rise of generative AI has transformed industries, driving an insatiable need for high-performance computing power. From ChatGPT to AI-driven content creation, marketing automation and healthcare innovations, enterprises are integrating AI into their core operations at an unprecedented pace.

The global generative AI market is expected to grow rapidly. Research from Fortune Business Insights estimates the market will reach $967.65 billion by 2032, expanding at a CAGR of 39.6%. This explosion in AI adoption underscores the critical role NVIDIA plays in shaping the future of AI infrastructure.

NVIDIA’s chips are used across many industries, including healthcare, automotive, manufacturing and cybersecurity, to power things like digital assistants, smart recommendations and language translation. As more businesses add AI tools, NVIDIA’s products are becoming even more important.

NVDA’s Zacks Rank and Other Stocks to Consider

Currently, NVIDIA carries a Zacks Rank #2 (Buy).

Cirrus Logic CRUS, FormFactor FORM and Lam Research LRCX are some other top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Cirrus Logic, FormFactor and Lam Research each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Cirrus Logic’s fiscal 2026 earnings has been revised upward by 7.2% to $7.58 per share over the past 30 days and suggests a year-over-year increase of 0.5%. Cirrus Logic shares have jumped 19.8% year to date.

The Zacks Consensus Estimate for FormFactor’s 2025 earnings has moved upward by 12 cents to $1.15 per share in the past 30 days, flat when compared with the 2024 level. FormFactor shares have soared 14% year to date.

The Zacks Consensus Estimate for Lam Research’s fiscal 2026 earnings has been revised upward by 7 cents to $4.79 per share in the past seven days, suggesting a year-over-year increase of 15.7%. Lam Research shares have surged 105.3% year to date.

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This article originally published on Zacks Investment Research (zacks.com).

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