To The Moon

AI Bubble or Buying Opportunity? Nvidia's Earnings Will Decide

$NVIDIA(NVDA)$   , the global AI chip leader, is set to report its fiscal third-quarter 2026 earnings after the market close on Wednesday, November 19. Amid a market environment rife with "AI bubble" speculation, this report is arguably one of the most highly anticipated events of the season. The core focus will be on the volume ramp and growth trajectory of its Data Center business.

Option Market Signals

With Nvidia's critical Q3 earnings report on deck for November 19th, the options market is reflecting a potent combination of massive exposure and clear directional bias.

The headline figure is the colossal 20.56 million in open interest. This staggering number underscores Nvidia's role as the market's central focus, with a historic amount of capital placed on the line. Furthermore, the rising open interest (blue line) in lockstep with the stock's price rally (grey line) is a classic bullish signal, indicating that new money is continuously flowing in to fund the uptrend.

Sentiment is unambiguously bullish. A Put/Call Ratio of 0.89 shows that for every 89 open put contracts, there are 100 open call contracts. This ratio has trended lower as the stock has climbed, suggesting traders are adding to their upside bets rather than hedging for a downturn.

Traders are paying a hefty premium for this exposure. The wide and growing gap between the 55.61% Implied Volatility and the 41.62% Historical Volatility is the key. The market is not expecting business as usual; it is fully braced for an earnings-driven move that shatters the stock's recent trading range.

Q3 Core Financial Indicators

~Revenue: Consensus estimates stand at $54.95 billion (up 57% YoY, up 18% QoQ), compared to the company's prior guidance of $54.0 billion.

~GAAP Gross Margin: Consensus at 73.4% (down 1.2 ppt YoY, up 1.5 ppt QoQ), vs. guidance of 73.3%.

~Non-GAAP Gross Margin: Consensus at 73.6% (down 1.4 ppt YoY, up 0.9 ppt QoQ), vs. guidance of 73.5%.

~GAAP Net Income: Consensus at $29.38 billion (up 52% YoY, up 11% QoQ), vs. guidance of $28.54 billion.

~Non-GAAP Net Income: Consensus at $30.74 billion (up 54% YoY, up 19% QoQ), vs. guidance of $30.05 billion.

Three Things to Watch

The Path to $500B Data Center Revenue and Future Outlook

The keynote slide from this year's GTC DC event remains fresh in investors' minds. Calculating from FY26Q1 (calendar Q1 2025) as shown on the slide, Nvidia's Data Center business has already generated a combined $80.2 billion in the first two quarters of this fiscal year, a figure that includes Hopper architecture products.

Based on current consensus estimates for Q3 and Q4 data center revenue ($49.1B and $56.1B, respectively), this implies a potential revenue space of $314.6 billion for fiscal year 2027. This would represent 70% year-over-year growth, an acceleration of 9 percentage points. Following rival $Advanced Micro Devices(AMD)$  's recent Analyst Day, where it projected a 60% compound annual growth rate (CAGR) for its data center revenue, the market will be laser-focused on Nvidia management's own outlook for data center growth.

Blackwell Ultra Ramp-Up and Rubin Production Timelines

There is significant divergence in market expectations regarding Nvidia's ultimate performance ceiling, making the Blackwell Ultra shipment cadence a critical factor for forecasting. On the last earnings call, management stated the transition to the GB300 was "seamless," with factory lines successfully converted in late July and early August to support the GB300 ramp. Production was stated to be around 1,000 racks per week, with output expected to accelerate in Q3 as additional capacity comes online.

Given the challenging initial ramp of the Blackwell generation and AMD's expressed confidence in its MI450 series, the market is also intensely focused on the production progress of Nvidia's next-generation Rubin platform. According to media reports, CEO Jensen Huang recently visited $Taiwan Semiconductor (TSM.US)$ to secure additional 3nm capacity, the process node used exclusively for the Rubin platform. Management stated last quarter that chips for the Rubin platform—including the Vera CPU, Rubin GPU, CX9 SuperNIC, NVLink 144 scale-up switch, Spectrum-X scale-out switch, and silicon photonics processors—have already "taped out" and entered the fab. Rubin remains on track for mass production in the second half of next year.

Can Gross Margins Return to 75%-Plus?

Nvidia's gross margins have been a key focus for several quarters. Last year, due to Blackwell product delays, a slow initial ramp, and the volume rollout of H20 products, Nvidia's Non-GAAP gross margin fell from a peak of 78.9% in Q1 2024 to a low of 71.3% in Q1 2025. It recovered to 72.7% in Q2 2025, and the guidance for Q3 is 73.5%. The key question for investors is whether margins can return to the 75% level in Q4.

This focus is heightened by AMD's recent Analyst Day, where its long-term (3-5 year) gross margin guidance of 55%-58% was below many expectations and showed only modest improvement from its current level (Q4 2025 guidance of 54.5%). Therefore, Nvidia's ability to maintain its margins above 75%—and thus preserve its significant premium over AMD—is critically important.

Summary

Taken together, Nvidia's report remains the most important release of the U.S. earnings season. It will likely determine the continuation of the market's "AI narrative" and could significantly influence the direction of the broader stock market. The spotlight will be on the Blackwell Ultra ramp, the timeline for margins returning to 75%, and, most importantly, the execution path and future outlook for its $500 billion Data Center revenue target.

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