Why Record Breaking AI Revenue Failed to Ignite a November Rally
Wall Street is currently witnessing a bizarre decoupling of fundamentals and price action. On Tuesday, November 25, Nvidia shares slid 2.59 percent to close at $177.82, despite the company reporting a jaw dropping 57 billion dollars in quarterly revenue just one week prior. This marks a nearly 15 percent retreat from the pivot top established on October 29. The money is flowing into the company coffers, but it is leaking out of the stock certificates. To understand why, one must follow the capital expenditure trail of the hyperscalers and the cooling systems of the data centers.
The official Q3 financial results released on November 19 painted a picture of absolute dominance. Data center revenue alone reached 51.2 billion dollars, a 66 percent surge compared to the same period last year. Jensen Huang described Blackwell demand as off the charts, yet the market is fixated on the friction of the rollout. Rumors of overheating in the high density NVLink 5.0 server racks have introduced a risk premium that the sheer volume of orders cannot seem to offset.
Macro Gravity and the Yield Curve Shift
The technical backdrop is equally treacherous. As of this Wednesday morning, November 26, the stock is fighting for support at the $176.67 level. Technical analysts at Wicked Stocks and Jefferies are noting a general sell signal as the 50 day moving average crosses below the longer term trend lines. Investors are weighing these internal technicals against a shifting macro landscape. The 10 year Treasury yield has cooled to 4.00 percent today, down from 4.13 percent last week, as Treasury yield shifts reported by Bloomberg suggest a potential interest rate cut in December. While lower yields typically favor growth stocks, the current volatility suggests a rotation may be underway, moving capital from AI infrastructure into broader market sectors that have lagged throughout 2025.
Dissecting the Revenue Engine
The gap between the bulls and the bears lies in the gross margin compression. While revenue exploded, GAAP gross margins dipped to 73.4 percent from 74.6 percent a year ago. This minor erosion reflects the high cost of ramping up the complex Blackwell architecture, which utilizes a massive 208 billion transistor design. For the first time in this cycle, Nvidia is facing the physical limits of semiconductor manufacturing. Supply chain bottlenecks at TSMC for CoWoS packaging mean that even with a backlog extending into mid 2026, the company cannot physically print money any faster than its foundry partners allow.
| Financial Metric | Q3 Fiscal 2026 | Q3 Fiscal 2025 | Year-over-Year Change |
|---|---|---|---|
| Total Revenue | $57.0 Billion | $35.1 Billion | +62.4% |
| Data Center Revenue | $51.2 Billion | $30.8 Billion | +66.2% |
| GAAP Gross Margin | 73.4% | 74.6% | -120 bps |
| Earnings Per Share (EPS) | $1.30 | $0.81 | +60.5% |
Geopolitical variables have also entered a new, more expensive phase. Per Investopedia’s earnings analysis, the market is pricing in the impact of the 25 percent fee on H200 exports to China. This policy, while allowing for continued shipments of high end silicon, forces Chinese tech giants like ByteDance to re evaluate their capital allocation. ByteDance is reportedly planning to spend 100 billion yuan on chips in the coming year, but a significant portion of that will now be absorbed by government levies rather than Nvidia’s bottom line. This friction is a clear example of the geopolitical risk premium that was absent during the 2024 rally.
The Gaming Floor and the Motherboard Tax
Outside the data center, the consumer segment is showing signs of fatigue. Gaming revenue hit 4.27 billion dollars, which represents a 30 percent year over year increase, but a 1 percent sequential decline. The launch of the RTX 50 series Blackwell GPUs has been met with mixed reviews due to what enthusiasts call the motherboard tax. High memory prices for GDDR7 VRAM have pushed the flagship RTX 5090 toward a 5,000 dollar price tag in some markets, potentially pricing out a significant portion of the core user base. If consumer demand falters while data center margins are under pressure, the narrative of the invincible tech giant starts to fray at the edges.
Looking toward the first quarter of 2026, the critical metric to monitor is the Blackwell Ultra production ramp. While the current generation is sold out, rumors of a 40 percent production cut in early 2026 for certain graphics card dies suggest that Nvidia may be aggressively pivoting all available capacity toward high margin AI superchips. The next major catalyst will be the January 2026 CES keynote, where the company must prove that its liquid cooling solutions for the GB200 racks can handle the thermal load of 72 interconnected GPUs without failing in the field. Until then, the stock remains a captive of its own high expectations, waiting for the macro environment to catch up to its fundamental reality.
