NVIDIA Forecasts $65B Q4 Revenue on AI Demand, but Supply and Margin Risks Persist

What happened

NVIDIA has forecasted nearly $65 billion in revenue for Q4 2026, as reported by Zacks, reflecting sustained AI demand amid a crypto downturn. This top-line strength aligns with hyperscaler capex guidance around $610 billion, but filings reveal gross margin fell to 73.4% in Q3 fiscal 2026 due to the Blackwell transition and a $4.5 billion H20 inventory charge from export controls. The DeepValue report highlights that NVIDIA's investment case requires Blackwell throughput normalization and margin recovery to mid-70s, with current valuation at 46.2x P/E pricing in perfect execution. However, revenue concentration with four customers at 22%/15%/13%/11% and limited GAAP backlog proxies like $2.4 billion deferred revenue increase vulnerability to demand shifts. Thus, while the revenue forecast confirms order flow, it does not address critical supply constraints or margin pressures that could derail earnings growth.

Implication

The $65 billion revenue forecast underscores NVIDIA's dominant position in AI infrastructure, yet it amplifies execution risks as the stock trades at 46.2x P/E with no margin of safety. Short-term, monitor sequential gross margin for signs of improvement toward the mid-70s and management's commentary on shortening 'several quarters' of constraint language, which are key to the WAIT rating. Long-term, persistent low margins or another export-control charge could trigger downside to $140, while clean margin recovery supports upside to $205, making patience prudent. High customer concentration and $30.8 billion in supply commitments mean any demand slowdown or policy shock could quickly impair financials, limiting upside protection. Therefore, maintain a WAIT stance, focusing on margin trends and hyperscaler capex updates over the next 3-6 months rather than reacting to top-line headlines.

Thesis delta

The revenue forecast aligns with the base case expectation of strong AI demand but does not shift the investment thesis, which remains centered on gross margin recovery and supply constraint resolution. No change to the WAIT rating is warranted, as the key monitors—margin progression and constraint duration—are unchanged, and the forecast does not mitigate risks like export controls or customer concentration.