One of the most eagerly anticipated events of the past few weeks just unfolded. Nvidia (NVDA +2.59%) offered investors a glimpse into how it's faring in the artificial intelligence (AI) market and what might lie ahead. The top AI chip designer reported third-quarter earnings for the fiscal year 2026, with revenue and profit surpassing analysts' estimates.
Nvidia also delivered strong profitability on sales and spoke of high demand for its products -- echoing comments about significant AI demand made by other tech leaders, from Amazon to Meta Platforms, over the past few weeks. This is great news for Nvidia shareholders and investors in other top AI stocks -- especially considering concerns in recent days about the possibility of an AI bubble taking shape.
Each number in Nvidia's earnings report offers us valuable information about the company's current situation -- and often clues about what's ahead -- so it's key to consider this full picture. But one number, in particular, stands out as one you definitely shouldn't ignore.
Image source: Getty Images.
Nvidia's path over the years
First, though, a quick summary of Nvidia's earnings story so far and a look at the main points in the latest report. Nvidia has been around for more than 30 years, initially serving the video gaming market, then progressively expanding the uses of its graphics processing units (GPUs). And when these high-powered chips emerged as a key tool for AI a few years ago, Nvidia's earnings took off. For example, the company's annual revenue grew from about $27 billion a couple of years ago to more than $130 billion in the latest fiscal year, thanks to its position in the AI market.
Nvidia, seeing great opportunity, entered the AI chip market early and has become the dominant company, offering not only GPUs but entire systems to serve customers with AI ambitions.
In the third quarter, Nvidia reported a 62% increase in revenue to $57 billion, a record, and a 65% gain in net income to more than $31 billion. The company also delivered a bright outlook, predicting fourth-quarter revenue of $65 billion and an expansion of gross margin to 74.8% from 73.4% in the third quarter on a GAAP basis.
A clear message about growth
Now, let's consider the number in the report that you really shouldn't ignore, as it offers us a clear message about Nvidia's growth. In recent quarters, though Nvidia's revenue soared to records, the pace of growth on a year-over-year basis has progressively slowed.
| Quarter | Revenue growth |
|---|---|
| Q2, fiscal 2026 | 56% |
| Q1, fiscal 2026 | 69% |
| Q4, fiscal 2025 | 78% |
| Q3, fiscal 2025 | 94% |
| Q2, fiscal 2025 | 122% |
| Q1, fiscal 2025 | 262% |
| Q4, fiscal 2024 | 265% |
|
Data source: Nvidia earnings reports. |
But, in the latest quarter, Nvidia's revenue bucked this trend. As I mentioned above, revenue climbed 62%, accelerating from 56% year-over-year growth in the previous quarter.
Now, this doesn't mean that Nvidia's growth all of a sudden will return to triple-digit pace: It's important to keep in mind that it was much easier for the company to generate enormous growth when its revenue numbers were significantly lower than they are today -- that was back in the very early stages of the AI boom.
This does show, however, that Nvidia's revenue isn't destined to simply decline from quarter to quarter until it reaches a low level. Instead, during various phases of this AI story, the pace of revenue gains may reaccelerate -- this is fantastic news for investors seeking growth players in the AI space. It means investors don't necessarily have to turn to a young and unproven company for a potentially big boost, and instead, may opt for market leader, Nvidia.
NASDAQ: NVDA
Key Data Points
The big picture
This latest number from Nvidia also is important because it shows us that the pace of revenue growth doesn't have to be linear -- if Nvidia's growth slows as it's done in the past, this doesn't mean trouble. Over time, the company has seen its revenue progress significantly as demand for its products has exceeded supply -- and this suggests it's most important to consider the big picture, this long-term development.
What does this mean for investors? Nvidia's growth story is far from over, as this reacceleration shows -- and this also is a reminder that even as the pace of growth picks up or slows, Nvidia has proven that over time revenue has marched higher, and the company is well positioned to keep that trend going.
