Nvidia Earnings Smash Records, but Wall Street Panics Anyway

Just a few days ago, Nvidia (NVDA) delivered some of the most impressive earnings results we’ve seen all season…

Record revenue of $57.0 billion, +22% quarter-over-quarter (QoQ) and +62% year-over-year (YoY)…

And record data center revenue of $51.2 billion, +25% QoQ and +66% (YoY).

Plus, CEO Jensen Huang couldn’t have been more enthusiastic during the company’s quarterly call. 

“Blackwell sales are off the charts, and cloud GPUs are sold out… Compute demand keeps accelerating and compounding across training and inference – each growing exponentially. We’ve entered the virtuous cycle of AI. The AI ecosystem is scaling fast – with more new foundation model makers, more AI startups, across more industries, and in more countries. AI is going everywhere, doing everything, all at once.”

Initially, the Street reacted positively to this blockbuster report – but that enthusiasm was quickly replaced by investors’ overwhelming skepticism. 

After a few short hours of gains, stocks sold off sharply – and they’ve largely been floundering ever since… especially AI stocks.

So, let’s unpack Wall Street’s freakout, shedding light on why some of those worries are real – but manageable – and, most importantly, why we still think this is a buy-the-fear moment for AI stocks…

Nvidia’s Quarter: Record-Breaking Results Across the Board

First, the facts – for its fiscal Q3 2026, Nvidia reported:

• Revenue: $57.0 billion, up 22% QoQ and 62% YoY
• Data center revenue: $51.2 billion, up 25% QoQ and 66% YoY 
• GAAP EPS: $1.30, up 67% from a year ago 
• Gross margin: mid-70s, still absurdly high for a hardware company 
• Q4 guidance: $65 billion in revenue, plus or minus 2% – another big sequential step-up 

On top of that, the balance sheet is immense:

• Operating cash flow: $23.8 billion this quarter, up from $17.6 billion a year ago 
• Accounts receivable: $33.4 billion with 53 days sales outstanding, actually down from 54 days last quarter 
• Inventory: $19.8 billion, up from $15.0 billion last quarter, as the firm stocks up for Blackwell and future architectures
• Supply commitments: $50.3 billion
• Multi-year cloud service agreements: $26.0 billion, up from $12.6 billion in just one quarter 

These colossal numbers don’t reflect a ‘bubble stock’ trying to hold it together but, rather, one of the best growth-and-profit stories in market history.

So, then, why did the broader AI trade wobble? And why are traders suddenly doom-posting about circular financing and accounts receivable blowups?

We see three main reasons…

Why Wall Street Sold the News on Nvidia’s Earnings

Expectations Were In the Stratosphere

Nvidia is no longer just another earnings report. It’s the heartbeat of the entire AI trade.

The stock has exploded over the past three years. And investors came into this quarter with one implicit assumption: ‘Show me perfection… or else.’

After that kind of run, even a great quarter can turn into a “sell the news” event. 

Options were pricing in a big move. AI bubble narratives were already swirling. Nvidia basically had to beat, raise, and also make everyone feel safe about the next three to five years of AI capex in a single call. 

That’s a nearly impossible bar.

The ‘Cisco Moment’ Fear Explained – and Why It’s Overblown

This is the part you’re seeing all over X:

• Accounts receivable jumped, leading bears to believe the company is ‘booking fake growth’ by letting customers pay later.
• Inventory rose to almost $20 billion.
  Bears: ‘If GPUs are ‘sold out for years,’ why is inventory piling up?’
• Cloud commitments doubled to $26 billion, fueling fears about circular financing.
  Bears: ‘Nvidia commits to buy cloud capacity from customers, customers buy more GPUs from Nvidia, and everyone pretends it’s organic demand.’ 

Layer on top of that huge supply commitments with foundries and suppliers and very concentrated revenue in a handful of hyperscalers and AI clouds – and you get a neat bearish story: “This isn’t real, broad-based demand. This is a small group of U.S. hyperscalers overbuilding AI capacity, helped along by Nvidia’s own balance sheet. When the music stops, so does Nvidia’s growth.”

That narrative hits an emotional nerve, especially for investors who remember the ‘Cisco moment’ of the dot-com era. Cisco Systems (CSCO) seemed like the indispensable backbone of the internet boom, trading at impossible multiples… until enterprise spending froze, and the stock lost nearly 90% from its 2000 peak. 

With Nvidia, bears see a similar setup today: an essential supplier riding a technology revolution whose customers might soon overbuild and then pull back.

Macro Pressures Add to AI Capex Concerns

Not to mention, the macro overlay has many people worried.

AI capex is running at a massive annualized clip, with Big Tech projected to spend approximately $400- to $405 billion in 2025. And the Federal Reserve is still in tightening/QT mode.

That has skeptics asking the same question over and over: “Are we really getting enough ROI from all these GPUs to justify the spend?”

So, when they see rising AR, inventory, and multi-year commitments, they mentally connect the dots to ‘overbuild’ and ‘capex hangover’ – even if the income statement and cash flow statement still look flawless today.