$92 Billion Nvidia Earnings Could Make or Break the AI Trade

Nvidia (NVDA) reports second-quarter earnings Wednesday, and Wall Street projects record sales near $92 billion. Analysts also expect net income to climb 95% to more than $51.5 billion, extending its rapid growth.

The report could ripple through the broader market. Nvidia’s outlook shapes spending across chipmakers, cloud providers and the wider artificial intelligence (AI) trade.

Wall Street’s Growing Dependence on Nvidia

Nvidia has beaten earnings estimates for 14 straight quarters. Last quarter, net income grew 210% year over year, far outrunning Wall Street’s 126% forecast, according to FactSet data.

Even so, that track record has raised the bar. Nvidia enters the report on its longest losing streak since 2022. Analysts have pushed their sales estimate to $92 billion, up from $78 billion at the start of the year.

The stakes extend beyond one chipmaker. OpenAI recently told investors its revenue rose just 18% last quarter as losses deepened. Hyperscalers are leaning more on debt to fund data centers. That has fed worries that AI spending has become the market’s biggest risk.

Nvidia has stepped in to backstop that spending. It joined a $500 billion AI financing plan with banks and took a stake in power supplier Cloverleaf Infrastructure.

Some Traders Are Bracing for a Pullback

Nvidia stock has fallen the session after each of its last four earnings reports, despite beating estimates. Options markets now price a 5.3% swing after Wednesday’s report. That tops the stock’s 4.8% average post-earnings move over the past year, per Option Research & Technology Services.

Some of the most active contracts have been puts betting on a drop from Friday’s $214.75 close. Those bets target $205 to $210, per Cboe Global Markets data. Rising memory prices and borrowing costs have fed concern that AI spenders could pull back.

Not everyone is hedging, though. HSBC’s Frank Lee raised his price target to $360 from $325, echoing Bank of America’s bullish target. He cited Nvidia’s supplier partnerships and its role in open-source AI.

Brian Mulberry, chief market strategist at Zacks Investment Management, told the Wall Street Journal.

“It’s kind of becoming more and more like the World Cup final than the Super Bowl at this point. It’s just gotten to be that big.”

Wednesday’s report will show whether Nvidia’s growth can still outrun the expectations Wall Street keeps raising.