Nvidia's $65B Q4 Guidance Confirms AI Momentum but Valuation Remains Extreme

What happened

Nvidia has forecasted Q4 FY2026 revenue of approximately $65 billion, as highlighted in a recent article, underscoring the ongoing strength in AI accelerator sales amid industry bubble speculation. This aligns with the company's prior guidance from its Q3 FY2026 filings, where revenue reached $57.0 billion with Data Center driving growth, primarily from Blackwell platforms. However, the DeepValue report cautions that Nvidia faces substantial risks, including export controls that have led to multi-billion-dollar charges, high customer concentration with hyperscalers, and rising competition from in-house ASICs and AMD. Despite robust financial performance, the stock trades at around 46x TTM EPS and over 4.5x a conservative DCF estimate of $33.53, embedding extreme expectations for flawless execution. Thus, while the forecast reaffirms Nvidia's pivotal role in the AI boom, it does not mitigate the valuation overhang or underlying vulnerabilities that challenge long-term sustainability.

Implication

The $65 billion forecast signals continued AI demand but offers no new upside beyond what was already priced in, leaving the stock vulnerable to any growth slowdown. Nvidia's dependence on a few hyperscaler customers and exposure to export controls heightens earnings volatility, making current multiples unsustainable if execution falters. Competitive erosion from hyperscaler ASICs could gradually erode market share and pricing power, challenging the assumption of perpetual dominance. Valuation metrics, such as a 462% premium to DCF, indicate minimal margin of safety, requiring near-perfect outcomes to justify current prices. Therefore, investors should monitor Data Center trends, regulatory developments, and competitive shifts closely, while considering reducing exposure until a more attractive entry point emerges.

Thesis delta

The new article's revenue forecast aligns with Nvidia's existing guidance and does not change the fundamental analysis from the DeepValue report. It reinforces the potential sell thesis by confirming growth expectations but failing to address the overvaluation or mitigate risks like competition and regulation. Consequently, the stance remains a potential sell, with trimming or underweighting advised until valuation better reflects the underlying uncertainties.