UBS Group AG: NVIDIA Corporation (NVDA.US) Q3 performance expected to exceed expectations again. The key points to watch are export restrictions and customer concentration risks.

UBS Group AG released a research report stating that despite facing resistance due to export restrictions to China, NVIDIA Corporation (NVDA.US) is expected to deliver better-than-expected performance in the third quarter. Currently, the firm maintains a "buy" rating for NVIDIA Corporation with a target price of $235. NVIDIA Corporation is scheduled to announce its latest financial report after the US market closes on November 19th. Wall Street analysts generally expect NVIDIA Corporation's Q3 revenue to reach $54.6 billion, a year-on-year increase of about 55%, with earnings per share of $1.23, a 52% increase from the previous year. UBS Group AG analysts predict that its revenue will be higher, reaching $56 billion, surpassing the company's own performance guidance of $54 billion. The firm expects NVIDIA Corporation's gross margin to stabilize around 73.5% this quarter and climb to 74.5%-75% in the fourth quarter. Analysts wrote in the report that despite concerns that rising costs of storage chips and other components may affect the gross margin, the firm still believes that NVIDIA Corporation has the ability to maintain the gross margin at a midpoint level of 70% by 2026. Looking ahead, UBS Group AG anticipates that NVIDIA Corporation's revenue guidance for the fourth quarter will be between $63 billion and $64 billion. The firm also noted that considering its production capacity and existing inventory, the actual guidance given by the company may be several billion dollars higher. Although some investors have expressed concerns that the "surprise" factor in earnings per share for fiscal year 2026 has diminished (or at least weakened) following the backlog orders disclosed at the GTC 2025 conference by NVIDIA Corporation, UBS Group AG believes that if the company can acquire more CoWoS production capacity, this figure still has the potential to increase. The firm currently maintains earnings per share forecasts for fiscal years 2026/2027 of approximately $7.75/$9.50. Key Controversy Prior to the financial report release, UBS Group AG stated that the market's main areas of debate regarding NVIDIA Corporation are expected to focus on two main points: the ongoing impact of US export restrictions on China and how NVIDIA Corporation plans to handle its B30 inventory after the Trump administration's decision not to allow exports (if approved, could bring greater flexibility to revenue). The second point is whether restrictions on major artificial intelligence customers in areas such as power supply, storage chip supply, or funding could restrict NVIDIA Corporation's profit growth. Furthermore, after conducting a supply chain review and referring to information shared at NVIDIA Corporation's GTC conference in October, UBS Group AG has raised its chip shipment forecast, citing better-than-expected GPU production and improved CoWoS packaging capacity for its main supplier Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US). UBS Group AG currently predicts that in the third quarter, NVIDIA Corporation's GPU output will increase by about 30% compared to the previous quarter, and forecasts that with smooth supply channels and accelerated deployment of AI server racks, NVIDIA Corporation's total chip shipments may eventually reach up to 10 million units between 2024 and 2026.