Welcome to the Free edition of How They Make Money. Over 250,000 subscribers turn to us for business and investment insights In case you missed it: AI skepticism is everywhere.Concerns about runaway spending, circular financing, and shaky startup economics dominate the headlines. But NVIDIA’s quarter tells the other side of the story. CEO Jensen Huang set the tone:
Those three shifts matter:
Because all three run on the same architecture, NVIDIA captures the compounding effect of the entire AI stack expanding at once. With overwhelming demand through 2026, the near-term “AI bubble implosion” narrative looks increasingly disconnected from reality. Let’s break down the quarter. Today at a glance:
1. NVIDIA Q3 FY26NVIDIA’s fiscal year ends in January, so the October quarter was Q3 FY26. Huang said Blackwell sales were ‘off the charts.’ The chart below makes the point.
Income statement:
Cash flow:
Balance sheet:
Q4 FY26 Guidance:
So, what to make of all this?
2. Business highlights🤝 So. Many. Partnerships.The past quarter was a blur of mega-partnerships, each one expanding NVIDIA’s reach deeper into the AI stack.
The combined commitments of Microsoft, OpenAI, and Anthropic effectively ensure multi-year visibility for NVIDIA’s systems and keep demand anchored in the hyperscaler ecosystem. Jensen Huang touched on the circular financing of customers:
NVIDIA now has a Berkshire-style challenge to put its money to work. With a fast-growing pile of $61 billion in cash, the company is investing in the most important players in AI to secure future offtake and expand the CUDA ecosystem. These deals ensure that the fastest-growing AI companies have the resources to scale, which reinforces NVIDIA’s long-term demand rather than propping it up.
🏗️ Customers build chips and still buy NVIDIACustom silicon is rising across cloud providers: TPUs at Google, Trainium at AWS, Maia at Microsoft, and Meta’s internal accelerators. These chips target specific workloads, not the frontier or the broad platform layer. Blackwell remains the default for large-scale training, inference, and agentic systems. Even alternative accelerators often rely on NVIDIA’s networking stack, reinforcing the systems moat rather than weakening it. Customer ASICs shift negotiating leverage at the edges, but they expand the total compute pie, and NVIDIA remains essential at the center. 🇨🇳 From Great Wall to FirewallChina has moved from a swing factor to a structural constraint. Q3 confirmed what the last two quarters hinted: H20 demand never materialized, B-series chips face fresh US scrutiny, and China’s regulators are directing state-backed data centers toward domestic accelerators. NVIDIA shipped just $50 million of H20 this quarter, effectively zero. Management now assumes no China revenue in both Q4 and FY27 guidance. The real risk is long-term. China is racing to build a full domestic AI stack that bypasses CUDA entirely. If successful, a market Jensen once pegged at ~$50 billion becomes structurally closed. For now, the rest of the world is more than compensating. 3. Key quotes from the earnings callCheck out the earnings call transcript on Fiscal.ai here. CFO Colette Kress:On demand and long-term visibility:
This anchors the growth looking forward and frames the $500 billion Blackwell–Rubin pipeline inside a multi-trillion-dollar decade-long build-out. CEO Jensen Huang:On power limits and performance per watt:
Power is the binding constraint, and that perf-per-watt is the real battleground for economics that could favor NVIDIA over the long haul. On the ecosystem and running every model:
Huang’s ecosystem argument is simple: one architecture, every major model, across consumer apps, enterprises, and science. It reinforces CUDA as the default AI operating layer. 4. What to watch moving forwardDepreciation anxietyA growing concern on Wall Street is the useful life of high-end AI hardware. Every new GPU generation makes the previous one look older faster, raising fears that hyperscalers will be forced to accelerate depreciation, pressuring long-term margins and EPS projections. Colette Kress pushed back. She emphasized that software updates extend the useful life of NVIDIA GPUs and that the shift from simple chatbots to agentic AI dramatically increases compute intensity, keeping older clusters fully utilized even as Blackwell and Rubin ramp. The worry is real, but NVIDIA’s argument is that the demand curve determines effective lifespan. Who’s buying?Many super investors dialed back their NVIDIA enthusiasm in the latest 13F filings covering Q3 2025. It’s not entirely surprising with the stock hitting new highs. NVIDIA remains one of the most widely held names, yet many funds are still underweight relative to its nearly 8% weight in the S&P 500. At ~32x forward earnings, NVIDIA trades mostly in line with the rest of Big Tech. But with EPS surging 67% Y/Y, you could argue NVIDIA looks cheap. NVIDIA’s growth is supply-constrained. That means quarter-to-quarter noise matters less than understanding how long this cycle can run and what the business looks like when demand normalizes.
What to watch nextIf you’re a regular reader, you already know what to watch:
NVIDIA sits at the center of the most important computing cycle in decades. The details will shift (China, custom silicon, financing), but the direction hasn’t changed. As long as AI factories keep scaling, NVIDIA remains the one building the rails.
That’s it for today! Happy investing! Want to sponsor this newsletter? Get in touch here.Thanks to Fiscal.ai for being our official data partner. Create your own charts and pull key metrics from 50,000+ companies directly on Fiscal.ai. Save 15% with this link. Disclosure: I own AAPL, AMD, AMZN, GOOG, META, and NVDA in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members. Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views. I would love to hear your feedback! Reply to this email to reach out to me with questions or suggestions. If you enjoyed today's newsletter, please share it with your friends and family! You’ll earn rewards if they subscribe. You’re a free subscriber to How They Make Money. For the full experience, become a Premium subscriber.
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Friday, November 21, 2025
🤖 NVIDIA: Bubble Talk Meets Reality
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