Key Points
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Nvidia’s shares are roughly 22% below their all-time high, even though its fiscal second-quarter revenue rose 106% to $96.2 billion, with data center revenue up 117% to $89 billion.
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Management guided to about $108 billion in third-quarter revenue, roughly 12% more than the second quarter, and the company says its Vera Rubin platform is in full production.
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The pullback reflects worries about AI infrastructure costs and political opposition to data centers.
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Nvidia (NASDAQ: NVDA) has made investors a tremendous amount of money over the past several years. But lately, the artificial intelligence chipmaker has been heading in the wrong direction.
Shares have been essentially flat so far in 2026 and have fallen about 22% from their all-time high. That’s quite a reversal for a company whose revenue more than doubled in its most recent quarter.
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And I think investors are getting an opportunity with Nvidia stock.
Nvidia reports its fiscal third-quarter earnings on Nov. 17, and I’m expecting another blowout performance. The company’s financial results and the extraordinary demand for AI computing suggest its growth story has plenty of room to run.
Nvidia’s business isn’t slowing down
In its fiscal second quarter, which ended July 26, Nvidia generated $96.2 billion in revenue, up 106% from a year earlier. Data center revenue reached $89 billion, an increase of 117%.
Those are remarkable growth rates for a company operating at Nvidia’s scale.
Management expects third-quarter revenue of approximately $108 billion, representing another 12% sequential increase at the midpoint. Nvidia also forecasts a non-GAAP gross margin of 74%, suggesting it expects to maintain substantial pricing power despite its enormous sales volume.
And there are good reasons to believe demand remains strong. SK Hynix, a major supplier of high bandwidth memory used in AI accelerators, has indicated that its advanced memory capacity is effectively sold out for years. That matters, because Nvidia’s GPUs need that memory to handle increasingly demanding AI workloads.
Meanwhile, Nvidia’s Vera Rubin platform is already in full production, with systems being deployed by major cloud providers and AI infrastructure companies.
Customers aren’t waiting for AI computing demand to disappear. They’re spending billions to secure more capacity.
The sell-off creates an opportunity
The latest weakness in Nvidia stock reflects concerns about the enormous cost of AI infrastructure and the possibility that political opposition could slow data center construction.
Those aren’t imaginary risks. If companies struggle to obtain electricity or construction permits, some GPU deployments could be delayed.
But there’s a difference between a delay in building data centers and a collapse in demand for AI computing. Nvidia has already demonstrated that it can sell enormous quantities of increasingly sophisticated chips while maintaining exceptional margins. Its next earnings report will provide another opportunity to see whether that demand is holding up.
I’m expecting the results to exceed management’s already aggressive outlook.
A 24% decline doesn’t automatically make any stock cheap, and Nvidia still faces risks from customer spending cuts, competing chips, and restrictions on AI infrastructure development. But with revenue doubling and a new generation of products entering production, I see a stronger business than what the stock’s recent performance suggests.
That’s why I’m buying the dip.
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Patrick Sanders has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
