Nvidia is the world’s leading provider of artificial intelligence (AI) chips for data centers.
The company is scheduled to report operating results for its third quarter of fiscal 2026 on November 19, and all signs point to another blockbuster performance.
Nvidia stock is trading at an attractive valuation, relative to its long-term average, which could open the door to significant upside.
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Nvidia(NASDAQ:NVDA) became the world’s top-valued company earlier this year thanks to explosive demand for its data center chips, which have become the benchmark for artificial intelligence (AI) development. On November 19, Nvidia will report operating results for its third fiscal quarter 2026, which ends October 31.
The report will provide investors with an update on the company’s financial performance, and the accompanying conference call will feature valuable comments from CEO Jensen Huang. Here’s why I predict the report will send Nvidia stock soaring.
Until now, each new generation of AI models required more computing capacity than the previous one. The large language models (LLMs) that powered OpenAI’s original versions of ChatGPT were great at generating quick answers, but weren’t always accurate. According to Jensen Huang, the latest AI reasoning models consume between 100 and 1,000 times more tokens (words and symbols) because they spend time “thinking” in the background to produce the best result.
All major AI companies are now working on AI reasoning models, including OpenAI, Anthropic and Metaplatformsand this is causing the demand for computing capacity to explode. Nvidia’s latest Blackwell Ultra GB300 graphics processing units (GPUs) are designed for these same workloads and offer up to 50 times more performance than the company’s older H100 chips, launching in 2022.
Next year, Nvidia will launch an entirely new GPU architecture called Rubin, which is said to be 3.3 times more powerful than Blackwell Ultra, or about 165 times more powerful than Hopper (the architecture in the H100). Given that November 19 marks the last quarterly investor conference call for calendar year 2025, Huang could offer an update on Rubin’s rollout.
These new GPUs will help Nvidia capture a dominant share of what Huang estimates will be $4 trillion in data center operator spending by 2030, as they modernize their infrastructure to meet demand from AI developers.
Nvidia’s forecast suggests its third-quarter revenue will be around $54 billion, an increase of 54% from last year. Based on previous quarters, the data center segment – where the company makes its AI GPU sales – will be responsible for almost 90% of this revenue.
According to the Wall Street consensus estimate (provided by Yahoo! Finance), Nvidia could also generate earnings of $1.24 per share, representing 53% year-over-year growth. If this number meets or exceeds analyst expectations, it could have very positive implications for Nvidia’s stock price (but more on that later).
Another thing investors should watch on November 19 is Nvidia’s forecast, as it can be a good indicator of future demand for the company’s chips. Wall Street is expecting a revenue forecast of $61.1 billion for the fourth quarter (which ends around January 31, 2026), so if management presents a higher number, it could be another bullish catalyst for Nvidia stock.
Nvidia stock might actually be cheap right now, despite the fact that it’s trading near an all-time high. Based on earnings of $3.56 per share over the trailing 12 months, Nvidia stock trades at a price-to-earnings (P/E) ratio of 51.9.
Although this represents a considerable premium for the Nasdaq-100 technology index, which trades at a P/E ratio of 33.5, this is actually a 15% reduction from Nvidia’s average P/E ratio of 60.9 over the past 10 years. If the company’s third-quarter earnings meet or exceed Wall Street’s Nov. 19 estimate, its price-to-earnings ratio could look even lower compared to its 10-year average, paving the way for the stock to rise.
Looking a little further ahead, Wall Street expects Nvidia to generate earnings of $4.50 per share for the full fiscal year 2026, followed by $6.38 per share for fiscal year 2027 (which begins in February). Based on these estimates, Nvidia stock is trading at forward P/E ratios of 40.5 and 28.6, respectively:
NVDA PE ratio data by YCharts.
In other words, assuming Wall Street’s estimates prove correct, Nvidia stock would need to soar 113% over the next 12 to 18 months just to have its P/E ratio trading in line with its 10-year average of 60.9.
The next report on November 19 represents a step on this path. However, the market is a forward-looking machine, so I believe investors will continue to evaluate Nvidia’s future potential, as long as its financial results continue to meet or exceed expectations.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool ranks and recommends Meta Platforms and Nvidia. The Motley Fool has a disclosure policy.
Prediction: Nvidia shares will soar after November 19, originally published by The Motley Fool
