This week, global markets will once again turn their attention to AI giant NVIDIA as it releases its Q3 earnings report on Thursday. JPMorgan suggests that NVIDIA is highly likely to deliver another "beat-and-raise" performance.
On November 18, reports indicated that JPMorgan’s latest research note highlights that NVIDIA’s growth is currently constrained not by demand but by the capacity limits of its vast supply chain. The bank projects Q3 revenue to exceed the consensus estimate of approximately $55 billion, providing guidance of $63–64 billion for the next quarter—significantly higher than the market’s $61.5 billion expectation.
The report states that another robust "beat-and-raise" is already anticipated, with the extent of upside largely dependent on NVIDIA’s supply chain expansion within three months.
According to JPMorgan, AI computing demand continues to significantly outstrip supply, with NVIDIA’s key clients—hyperscale cloud providers, emerging cloud firms, and AI labs—still facing compute bottlenecks. The bank estimates Blackwell/Blackwell Ultra rack shipments grew ~50% quarter-over-quarter in Q3, reaching ~10,000 racks, with momentum expected to persist into Q4.
For the earnings call, market focus will center on management’s outlook for Blackwell/Blackwell Ultra’s growth trajectory in the first half of fiscal 2027, alongside responses to AI spending sustainability, data center power constraints, and component cost inflation’s impact on margins.
**"Supply-Demand Imbalance" Drives Likely Earnings Beat** JPMorgan emphasizes that the debate around NVIDIA has shifted from demand health to whether its supply chain can keep pace with aggressive AI compute deployment plans. With AI data center spending in the "early innings" of a multi-year cycle, demand remains "materially above supply," leaving major clients grappling with shortages despite two years of heavy investment.
Against this backdrop, JPMorgan forecasts another earnings beat. Specifically, it expects fiscal Q3 (October) revenue above the $55 billion consensus, with Q4 guidance of $63–64 billion versus the $61.5 billion market expectation.
The report underscores that another "beat-and-raise" is "in the cards," with the magnitude hinging entirely on supply chain ramp-up speed.
**Supply Chain Capacity: The Only Brake on Growth** With demand assured, supply remains the sole constraint.
JPMorgan details NVIDIA’s supply chain execution, noting strong Blackwell/Blackwell Ultra rack shipments over the past 3–4 months. Q3 shipments likely rose ~50% QoQ to ~10,000 racks, with similar growth expected in Q4. Annual shipments for fiscal 2026 are projected at 28,000–30,000 racks.
While additional 3nm and CoWoS capacity could lift GPU shipments over the next 12 months, supply constraints will remain the key growth limiter through 2026. However, the bank offers an optimistic long-term signal: NVIDIA’s supply chain could support a doubling of annual rack shipments to 60,000–70,000 by fiscal 2027/calendar 2026.
Crucially, NVIDIA’s disclosed backlog at its October GTC event already exceeds 70,000 racks—surpassing next year’s maximum capacity and providing high growth visibility.
JPMorgan maintains an "Overweight" rating on NVIDIA with a $215 price target (~15% upside).
**Beyond Earnings: Four Key Investor Concerns** The bank notes that post-earnings stock reactions may hinge more on management’s forward commentary than numbers. Investors should watch for updates on:
1. **Blackwell/Blackwell Ultra ramp-up speed** into early fiscal 2027 (H1 2026). 2. **AI spending sustainability**: JPMorgan’s global team sees ample funding through 2030. 3. **Power constraints**: ~120 GW of global data center power capacity is slated for the next five years, but delivery delays (3–4 years for gas turbines, >10 for nuclear) pose bottlenecks. 4. **Component cost inflation’s margin impact**, particularly from memory and chip pricing.
On margins, JPMorgan flags rising LPDDR memory costs as a bigger pressure point than HBM. While HBM4’s 30–40% ASP premium over HBM3e can be priced into NVIDIA’s Rubin platform, LPDDR pricing remains market-driven even under long-term agreements.
Still, the bank believes NVIDIA can achieve its mid-70% gross margin target by fiscal 2026 year-end, though further expansion may be limited by input cost inflation.
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