Chip giant Nvidia is set to release its latest earnings report – and the results could move the entire US stock market.

Over the past two years, the chipmaker has risen to become the world’s most valuable company, with a market capitalisation of more than $4 trillion.

Recommended Stories

list of 4 itemsend of list

When Nvidia announces its earnings on Wednesday, investors will get to see how the tech giant has been faring amid the tumult of President Donald Trump’s trade salvoes and concerns about whether artificial intelligence has been overhyped.

Why is Nvidia so important?

Nvidia specialises in making the graphics processing units (GPUs) that power AI, including the Blackwell B200, marketed as the world’s most powerful chip.

The California-based company’s chips have become essential to the world’s largest tech companies, including Microsoft, Meta, Amazon and Alphabet, since AI exploded into the mainstream with the release of OpenAI’s generative AI chatbot, ChatGPT, in November 2022.

The company’s portfolio also includes data centres and gaming.

Nvidia posted annual revenue of $130.5bn for the last fiscal year, which ended in late January.

What will the market be looking for in Nvidia’s earnings report?

Analysts will be examining various metrics, including the company’s quarterly revenue.

Nvidia’s revenue has been growing at breakneck speed for the past several years, thanks to the AI boom and the surge in demand for its chips.

Nvidia posted triple-digit revenue growth for five straight quarters between mid-2023 and 2024, according to company filings.

Advertisement

Since then, annual revenue growth has coasted in the high double digits.

Last quarter, the company reported revenue of $44.1bn, a 69 percent increase from the same period a year ago.

While such figures would be the envy of any company, the firm’s explosive performance has also raised questions about how long its stellar run can last.

In advance of its forthcoming earnings report – which covers the second quarter of fiscal year 2026 – Nvidia has said it expects revenue of $45bn plus or minus 2 percent.

Analysts have predicted revenue of up to $46bn, or 53 percent growth year-on-year.

The earnings report is also expected to show signs of whiplash from the Trump administration’s tariff war.

In April, Trump banned Nvidia from selling its H20 chip – specially designed for the Chinese market – to China. At the time, Nvidia said the ban would cost the company $8bn.

Trump later walked back the ban when Nvidia agreed to share 15 percent of its H20 chip sales with the US government, a deal that was finalised on August 11, two weeks after the end of its second quarter.

Why is there worry that AI is overhyped?

As Silicon Valley pours billions into AI, some observers, such as OpenAI CEO Sam Altman, have questioned whether there is a bubble.

“Are we in a phase where investors as a whole are overexcited about AI? My opinion is, yes,” Altman told The Verge in an interview earlier this month.

He is not the only one who is worried.

Analysts have drawn parallels to the collapse of the “Nifty Fifty” in the 1970s, said Arun Sai, senior multi-asset strategist at Pictet Asset Management in the United Kingdom.

The Nifty Fifty was a group of 50 of the most valuable companies in the US, including Xerox and IBM.

Though highly profitable, the firms became highly overvalued in the late 1960s and early 70s.

When the bubble burst following the 1973-74 stock market crash, the value of Nifty Fifty stocks fell by more than 50 percent.

“They were fantastic companies, but they were trading on the wrong price,” Sai told Al Jazeera.

“This is the old notion of you could be a great company, but not a great stock if the price is wrong.”

What’s up with the Magnificent Seven?

Five decades later, some investors are asking whether the “Magnificent Seven” – Nvidia, Alphabet, Amazon, Apple, Meta, Microsoft, and Tesla – could be overvalued as well.

Valuations have soared into the trillions of dollars on the back of the AI boom, although there is some divergence within the group, with Apple and Tesla faring less well recently.

Advertisement

Amazon recently said it expects to spend $85bn on AI over the next year, while Microsoft predicts it will spend $100bn.

AI has been one of the few bright spots in an otherwise slowing economy that has been undergoing upheaval since Trump took office.

“Growth is dwindling in other sectors, but there is this very small, niche, concentrated pocket of hyper growth,” Sai said. “This suddenly becomes a much bigger contributor to US GDP growth than it would have been in a normal phase of the cycle.”

Corporate spending on AI has been likened to an arms race, but tech giants – and Nvidia customers – will also sooner or later need to show investors that their betting on the sector will lead to profits.

US tech giants are already facing challenges from companies like China’s DeepSeek, which made global headlines in January when it unveiled a powerful but much cheaper AI model.

So far, innovation does not appear to be translating into higher returns.

In a recent survey by Massachusetts Institute of Technology (MIT), 95 percent of enterprises looked at reported no return on their AI investments despite the billions ploughed into the sector.

How much could Nvidia’s latest earnings move the market?

Because of its sky-high valuation, Nvidia alone makes up almost 8 percent of the S&P500 – the benchmark index of 500 top companies listed on the US stock market.

That means Nvidia’s earnings have the potential to have a significant impact, good or bad, on the stock market as a whole.

Big movements in Nvidia’s stock price have triggered swings in the S&P 500 of 1 percent or more in the past.

After Nvidia’s earnings results in February sent its share price down more than 8 percent, the S&P 500 fell 1.6 percent.