After a couple of years of blistering gains, stocks driven higher by artificial intelligence (AI) are beginning to experience more moderate growth. This inevitable downshift has some investors asking if the adoption of AI still has legs now that the initial hype has subsided.
Take Nvidia (NVDA 1.30%) stock, for example. The company's graphics processing units (GPUs) were the first chips available with enough computational horsepower to power these next-generation AI models. As the undisputed frontrunner, it quickly became the gold standard and flag bearer for AI. More recently, however, the specter of competition and slowing growth has raised concerns that Nvidia's best days are behind it.
The company is scheduled to release the results of its fiscal 2026 third quarter after the market close on Wednesday, Nov. 19, and shareholders -- and indeed Wall Street at large -- will be paying close attention to see what the future holds for AI.
Let's take a look at the company's recent results and expectations for growth in the space to see if Nvidia stock still represents a compelling opportunity heading into its highly anticipated financial report.
Nvidia's GB200 Grace Blackwell AI Superchip: Image source: Nvidia.https://nvidianews.nvidia.com/multimedia/search?origin=multimedia&keywords=gb200
Slowing growth
For its fiscal 2026 Q2 (ended July 27), Nvidia delivered revenue of $46.7 billion, which soared 56% year over year and 6% sequentially. This robust top-line growth fueled strong earnings per share (EPS) of $1.08, which surged 82%.
Lest there be any doubt, it was the continuing adoption of AI that fueled the results, as revenue in its data center segment jumped 61%.
Management expects the company's growth streak to continue. For its fiscal 2026 Q3 (ending Oct. 27), management is guiding for revenue of $54 billion, which would represent year-over-year growth of 54%.
Wall Street is equally bullish, with analysts' consensus estimates calling for revenue of $54.66 billion and adjusted EPS of $1.24. While this would mark a slight deceleration from Q2, it would still represent compelling growth, particularly on top of triple-digit growth in the prior-year quarter.
The build-out continues
The popular narrative suggests the data center build-out to support the adoption of AI -- especially evident among the major cloud providers and large tech companies -- is on the downslope, but the evidence suggests otherwise.
According to Del'Oro Group, data center spending rose 43% year over year in Q2, while accelerated server spending rose 76%. This higher infrastructure spending is expected to continue.
For example, the so-called "Four Horsemen of AI" -- namely, Microsoft Azure, Amazon Web Services, Alphabet's Google Cloud, and Meta Platforms -- have all boosted plans for additional capital expenditure (capex) spending in 2025, with much of that spending earmarked for the additional servers and data centers needed to support AI.
- Microsoft -- $120 billion.
- Amazon -- $118 billion.
- Alphabet -- $85 billion.
- Meta -- $68 billion at the midpoint of its range.
Nvidia CEO Jensen Huang expects data center spending of between $3 trillion and $4 trillion by the end of the decade. The company dominates data center GPU spending, controlling an estimated 92% of the market, according to IoT Analytics, so it has the most to gain from the current build-out.
NASDAQ: NVDA
Key Data Points
Is the stock a buy before Nov. 19?
The biggest question for shareholders right now is whether Nvidia stock will rise or fall after the company reports earnings. Frankly, I have no clue.
Here are my very vague predictions:
- Nvidia will announce another quarter of record revenue (a low bar, I know).
- The company will likely beat analysts' consensus estimates (which it has a tendency to do anyway).
Beyond that, your guess is as good as mine, and my prognostications could fall short.
What we do know is this: Nvidia remains the gold standard for data center GPUs, and the AI-related build-out continues. In recent months, rivals have made headlines with some big contract wins, but frankly, so has Nvidia -- and competition was always going to be a factor.
Estimates regarding the size of the AI market continue to ratchet higher. While most conservative approximations begin at $1 trillion, some more bullish estimates suggest the market could be as much as 15 times higher.
Then there's Nvidia's valuation. The stock currently sells for 28 times next year's expected earnings. While you might be tempted to think that's expensive, consider this: Wall Street is forecasting Nvidia's revenue growth at more than 26% annually over the coming five years.
I'd argue that's a fair price to pay for a company at the heart of the AI revolution.
