The results of Chip triumphant Nvidia’s most recent earnings report are expected to affect the US stock market in general.
With a market capitalization of more than $4 trillion, the chipmaker has grown to become the most valuable company in the world in the past two years.
Investors will be able to see how the tech giant has fared as a result of President Donald Trump’s trade rumors and worries about whether artificial intelligence has been overhyped when Nvidia releases its earnings on Wednesday.
What makes Nvidia so crucial?
Nvidia is a manufacturer of graphics processing units (GPUs), which are used to power AI, including the Blackwell B200, which is marketed as the most powerful chip in the world.
Since the release of OpenAI’s generative AI chatbot, ChatGPT, in November 2022, the California-based company’s chips have become crucial to the world’s largest tech companies, including Microsoft, Meta, Amazon, and Alphabet.
Data centers and video games are also included in the company’s portfolio.
For the previous fiscal year, which ended in late January, Nvidia reported a year-over-year revenue of $ 130.5 billion.
What will Nvidia’s earnings report reveal for the market?
Analysts will be looking at various metrics, including the company’s quarterly revenue.
Due to the boom in AI and the rise in chip demand, Nvidia’s revenue has increased at a rate of record.
According to company filings, Nvidia increased revenue by five straight quarters between mid-2019 and 2024.
Since then, annual revenue growth has been in the double digits.
The business reported revenue of $44.1 billion last quarter, an increase of 69 percent over the same period last year.
The company’s explosive performance has also raised questions about how long its stellar run can last, even though such figures would be the envy of any company.
Nvidia has stated that it anticipates revenue of $45 billion plus or 2% ahead of its upcoming earnings report, which covers the second quarter of fiscal year 2026.
Analysts predicted a 46 billion dollar revenue increase, or a 53 percent increase over the previous year.
The Trump administration’s tariff war is expected to cause some whiplash in the earnings report.
Nvidia was prohibited from selling its H20 chip to China by Trump in April. Nvidia claimed the ban would have cost the company $8 billion at the time.
When Nvidia agreed to share 15% of its H20 chip sales with the US government, a deal that was finalized on August 11, two weeks after the second quarter ended, Trump later rebuffed the ban.
Why is it believed that AI is fabricated so much?
Some observers, like OpenAI CEO Sam Altman, have questioned whether there is a bubble as Silicon Valley invests billions in AI.
Are we at a point where all investors are overjoyed about AI? Yes, according to Altman in an interview earlier this month.
Not just him, though, are concerned.
Analysts have compared the 1970s’ collapse to the “Nifty Fifty,” according to Arun Sai, senior multi-asset strategist at Pictet Asset Management in the UK.
Xerox and IBM were two of the US’s 50 most valuable companies that made up The Nifty Fifty.
In the late 1960s and early 1970s, the businesses were extremely profitable, but they overvalued significantly.
The value of Nifty Fifty stocks dropped by more than 50% when the bubble burst following the stock market crash in 1973-1974.
Sai told Al Jazeera, “They were fantastic companies, but they were trading at the wrong price.”
If the price is incorrect, you might be a great company but not a great stock, as the saying goes.
What’s going on with the Seven of the Magnificent?
Some investors are now questioning whether the “Magnificent Seven” – Nvidia, Alphabet, Amazon, Apple, Meta, Microsoft, and Tesla – may also be overvalued.
On the heels of the AI boom, valuations have soared into the trillions of dollars, despite some group differences, with Tesla and Apple both performing less well in recent years.
Microsoft predicts it will spend $100 billion on AI while Amazon recently stated that it anticipates spending $85 billion over the next year.
One of the few positive aspects of an otherwise sluggish economy that has experienced upheaval since Trump took office is AI.
There is a very small, niche, concentrated pocket of “hyper growth,” Sai said, “but growth is dwindling in other sectors.” This suddenly contributes significantly to the US economy’s growth more than it would have in a typical cycle.
Although corporate AI spending has been compared to an arms race, tech companies and Nvidia customers will also need to demonstrate to investors that their investments in the field will eventually yield profits.
US tech giants are already facing difficulties from multinationals like China’s DeepSeek, which unveiled a powerful but much less expensive AI model in January and made headlines worldwide.
Innovation hasn’t yet appeared to be having a positive impact on profits.
Despite the billions that were put into the sector, 95 percent of businesses reported no return on their AI investments, according to a recent survey by Massachusetts Institute of Technology (MIT).
What potential impact could Nvidia’s most recent earnings have on the market?
Nvidia alone accounts for almost 8% of the S&, P500, the benchmark index of the 500 top companies that are listed on the US stock market, due to its sky-high valuation.
That implies that Nvidia’s earnings have the potential to have a significant influence on the overall stock market, whether or not.
In the past, significant changes in Nvidia’s stock price have caused swings in the S&, P 500 to exceed 1 percent.
