UBS has released a research report stating that despite challenges from export restrictions to China, NVIDIA (NVDA.US) is expected to deliver another better-than-expected Q3 performance. The firm maintains a "Buy" rating on NVIDIA with a target price of $235. NVIDIA is scheduled to report its latest earnings after the U.S. market closes on November 19.

Wall Street analysts generally anticipate NVIDIA's Q3 revenue to reach $54.6 billion, up approximately 55% year-over-year, with earnings per share (EPS) at $1.23, a 52% increase. UBS analysts project even higher revenue of $56 billion, surpassing the company's own guidance of $54 billion. The firm expects NVIDIA's gross margin to stabilize around 73.5% this quarter, rising to 74.5%-75% in Q4.

Despite investor concerns about rising costs of memory chips and other components potentially impacting margins, UBS believes NVIDIA can maintain gross margins in the mid-70% range through 2026. Looking ahead, UBS forecasts NVIDIA's Q4 revenue guidance to be between $63 billion and $64 billion, with the possibility of an even higher figure given production capacity and inventory levels.

While some investors argue that the "surprise" factor for 2026 EPS has diminished due to disclosed backlog at GTC 2025, UBS suggests upside potential if NVIDIA secures additional CoWoS capacity. The firm maintains its 2026/2027 EPS estimates at approximately $7.75/$9.50.

Key debates ahead of the earnings report revolve around two issues: the ongoing impact of U.S. export restrictions to China and whether constraints in power supply, memory chips, or funding for major AI customers could limit NVIDIA's profit growth. UBS notes that the earnings call will likely focus on the pace of AI infrastructure deployment and potential customer concentration risks.

Following supply chain checks and insights from NVIDIA's October GTC event, UBS has raised its chip shipment forecasts, citing better-than-expected GPU yields and improved CoWoS packaging capacity from key supplier TSMC (TSM.US). The firm now expects NVIDIA's Q3 GPU output to grow ~30% sequentially and projects total shipments could reach 10 million units between 2024 and 2026 as supply chains stabilize and AI server rack deployments accelerate.