Joe Tigay NVDA Earnings Prove the Rumors of AI’s Demise Were Greatly Exaggerated
By Joe Tigay, Portfolio Manager, Rational Equity Armor Fund
As a former VIX and SPX options market maker who now manages the Rational Equity Armor Fund, I’ve learned to distinguish between market noise and genuine inflection points. NVIDIA’s Q3 FY2026 earnings report represents the latter—a resounding confirmation that the AI infrastructure buildout is not only real but accelerating at a pace that even optimists underestimated.
The Beat That Silenced the Skeptics
The numbers speak for themselves: $57 billion in revenue, $1.30 in adjusted EPS, and—most critically—Q4 guidance of $65 billion that crushed street estimates by roughly $4 billion. The market’s immediate response, pushing shares from $186 to $196 in extended trading (a 5.3% surge), reflected what seasoned traders recognize as genuine positive surprise, not manufactured hype.
But here’s what matters most from a risk management perspective: the Data Center business now represents nearly 90% of total revenue, generating $51 billion in the quarter alone—up 66% year-over-year. This isn’t diversification; it’s dominance. And when Jensen Huang declares that “Blackwell sales are off the charts, and cloud GPUs are sold out,” he’s confirming what the options flow has been telegraphing for weeks—demand is outstripping supply.
Addressing the Burry Thesis Head-On
Michael Burry’s recent short position against NVDA centered on an accounting critique: that hyperscalers were fraudulently extending the depreciation schedules of AI chips to 5-6 years when rapid innovation should mandate 2-3 year cycles. It’s a clever thesis that speaks to a fundamental concern about AI capital expenditure sustainability.
Huang’s rebuttal during the earnings call was surgical. He pointed to A100 GPUs shipped six years ago that are still running at full utilization today. This isn’t marketing spin—it’s empirical evidence that directly validates the longer depreciation schedules. The implication is profound: these chips aren’t just holding value; they’re delivering continuous ROI over extended periods, which fundamentally supports the investment case for both NVIDIA and its customers.
As someone who built a career reading market structure and volatility signals, I recognize when a short thesis has been structurally invalidated. The longevity evidence doesn’t just counter Burry’s position—it reinforces the durability of the entire AI infrastructure investment cycle.
The Meta Proof Point: ROI Is Real
Perhaps the most underappreciated data point from this earnings cycle came from Meta, which reported a 5% increase in ad conversions directly attributable to generative AI implementations. This is the smoking gun that bulls have been seeking—concrete evidence that massive AI CapEx is translating into measurable business outcomes, not just speculative positioning.
When hyperscalers can demonstrate clear ROI on their AI investments, the “when will they stop spending?” narrative collapses. The answer becomes obvious: they won’t stop because it’s profitable to continue.
The Networking Wildcard
NVIDIA’s Networking revenue hit $8.2 billion, up 162% year-over-year. This explosive growth signals something critical that many analysts are missing: NVIDIA is transitioning from a chip supplier to a full-stack AI infrastructure provider. The rack-scale, integrated approach creates deeper customer lock-in and higher switching costs—exactly the kind of moat that sustains premium valuations.
From an options market maker’s perspective, this shift reduces binary risk. When a company controls more of the value chain, single-point failures become less likely, and volatility patterns stabilize even as absolute price levels rise.
Implications for Portfolio Construction
The immediate takeaway for tactical positioning: this earnings report validates the AI investment thesis for at least the next two quarters. The $65 billion Q4 guidance isn’t just a beat—it’s an acceleration, suggesting momentum is building rather than plateauing.
For the Rational Equity Armor Fund, this creates interesting opportunities in structured positioning. The implied volatility in NVDA options should compress as earnings uncertainty resolves, but the upward price momentum argues for maintaining exposure with defined risk parameters.
More broadly, this report should fuel a risk-on environment across the AI supply chain—data center REITs, component suppliers, and infrastructure plays should all benefit from renewed conviction that this cycle has legs.
The Bottom Line
Mark Twain famously said that reports of his death were greatly exaggerated. The same applies to the AI trade. NVIDIA’s Q3 results don’t just beat expectations—they fundamentally rebut the core bear arguments around depreciation sustainability, ROI visibility, and demand durability.
As we head into the next couple of months, the setup favors continued strength in AI-related equities. The combination of validated ROI, accelerating demand signals, and direct refutation of prominent short theses creates a constructive backdrop that experienced traders should respect.
The rumors of NVDA’s demise weren’t just exaggerated—they were premature by several years and billions of dollars in revenue.
Joe Tigay is the Portfolio Manager of the Rational Equity Armor Fund and a former VIX and SPX options market maker. Learn more about Joe’s background and investment approach here.
The views expressed are those of the author and do not necessarily reflect the views of Equity Armor Investments or Rational Advisors. Past performance is not indicative of future results.
