As the biggest beneficiary of the AI craze, Nvidia’s earnings will also be closely watched for a read into spending on the technology.
“Investors expect both the results and the guidance to be a couple billion better than consensus,” said Brian Colello, equity strategist at Morningstar Investment Services. “There’s so much fast money in the market, if there’s just a headline number that doesn’t live up that will likely cause a volatile reaction one way or the other.”
In addition, the report could have major implications for the broader market, given Nvidia’s stature as the world’s most valuable company. With a $4.4 trillion market capitalization, it has an 8.1% weighting in the S&P 500 Index, meaning the stock has the power to swing the entire market. Options traders are pricing in a move of about 6% in either direction for Nvidia shares the day after results, according to data compiled by Bloomberg.
Wall Street expects Nvidia to report $46.2 billion in revenue for the second quarter and adjusted earnings per share of $1.01, both up roughly 50% from the same period a year ago. For the third quarter, consensus estimates project revenue of about $53.5 billion and adjusted earnings per share of $1.21.
Analysts and investors are eagerly awaiting Chief Executive Officer Jensen Huang’s remarks on China, including the development of the B30 chip, which could replace the H20 chip. Of course, Chinese sales aren’t the biggest story for Nvidia, as demand for its Blackwell chips in other markets appears to be so strong that the company could beat estimates without any contribution from the country.
That said, with the chipmaker’s stock price about 1% from a record high and up nearly 35% since its first quarter earnings report in May, a strong China outlook could be key to keeping the rally going.
“The overall story in Nvidia can still play out with everything else going on,” said David Wagner, portfolio manager at Aptus Capital Advisors LLC, adding that any inclusion of revenue from China is “just icing on a cake.”
