NVIDIA Corporation’s NVDA networking business is emerging as an important growth driver. As artificial intelligence (AI) models grow larger and more complex, customers need faster and more efficient ways to connect thousands of processors. This trend is boosting demand for NVIDIA’s networking products, including NVLink, InfiniBand and Spectrum-X Ethernet. These solutions are designed to move data quickly between graphics processing units, which is critical for both training and inference workloads.
In recent quarters, NVIDIA’s networking revenues have grown faster than many other business segments. In the third quarter of fiscal 2026, the company’s revenues from the networking business grew 162% year over year and 13% sequentially to a record level of $8.19 billion.
Cloud service providers and AI-focused data center operators are building large clusters that require high-speed interconnects. NVIDIA benefits from this shift because its networking hardware is tightly integrated with its compute platforms. Customers often buy the full system rather than mixing components from multiple vendors, which increases the total value of each deployment.
NVIDIA’s growing networking business also supports its margins. High-performance switches and interconnects carry attractive pricing, especially when sold as part of a larger AI system. As cluster sizes increase, networking content per data center also rises, increasing margins.
Overall, AI networking appears well-positioned to support NVIDIA’s next phase of growth. If AI workloads continue to scale, networking could become an even more meaningful contributor to NVDA’s long-term revenues. The Zacks Consensus Estimate for the company’s fiscal 2026 networking revenues is pegged at $29.34 billion, indicating year-over-year growth of approximately 126%.
NVIDIA’s Key Rivals in AI Networking
NVIDIA faces competition from Broadcom AVGO and Arista Networks ANET in the AI networking space. Broadcom is a leader in Ethernet switching and custom silicon solutions, providing high-performance chips that form the backbone of modern data centers. Its strong relationships with hyperscalers like Google and Amazon allow it to deliver networking hardware tailored for large-scale AI and cloud workloads.
Arista Networks is another important rival, specializing in high-speed Ethernet switches used in AI and cloud environments. Arista Networks’ software-driven architecture and scalable systems make it a preferred choice for cloud service providers building AI clusters.
NVIDIA’s Price Performance, Valuation and Estimates
Shares of NVIDIA have risen around 19.6% over the past six months compared with the Zacks Semiconductor – General industry’s gain of 17.5%.
NVIDIA 6-Month Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, NVDA trades at a forward price-to-earnings ratio of 27.52, lower than the industry’s average of 29.29.
NVIDIA Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for NVIDIA’s fiscal 2026 and 2027 earnings implies a year-over-year increase of approximately 55.5% and 54.4%, respectively. Estimates for fiscal 2026 and 2027 earnings have been revised upward in the past 30 days.
Image Source: Zacks Investment Research
NVIDIA currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
