Prediction Markets Are 95% Sure Nvidia Will Beat Earnings -- Here's What That Means for Investors
Key Points
The vast majority of people betting on Nvidia's operating earnings expect the company to beat Wall Street analysts.
This is not a surprise, considering Nvidia usually beats estimates.
However, it does set a higher bar because an earnings beat is likely already reflected in the stock price, so if the company misses estimates, its stock could decline.
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The artificial intelligence (AI) chip giant Nvidia (NASDAQ: NVDA) will report earnings after the market closes on Wednesday, Feb. 25. Investors will be closely watching for details on the company's business and the broader demand for AI.
However, the broader market is not too concerned about the company's actual top-line performance in its 2026 fiscal fourth quarter. According to the predictions website Polymarket, 95% of people betting expect Nvidia to beat earnings-per-share (EPS) estimates set by Wall Street analysts, who are currently forecasting operating EPS of $1.52.
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Image source: Nvidia.
That EPS would be a 17% increase from the prior quarter's result, when Nvidia grew its quarterly operating EPS by 24%. Nvidia has regularly beaten quarterly EPS estimates over the years, missing on very few occasions.
The users of Polymarket seem pretty sure that Nvidia will do well. Here's what that level of confidence might mean for investors.
Don't expect an earnings beat to move the stock that much
With expectations high in the predictions market, investors have likely already factored an earnings beat into Nvidia's stock price. This means an earnings beat is unlikely to move the stock price much, while an earnings miss could trigger a decent sell-off because it will be unexpected.
There are many more factors investors will be watching. For instance, investors will also be looking for Nvidia to generate revenue topping estimates. The consensus analyst revenue estimate comes to roughly $65.7 billion, representing a year-over-year increase of 67%.
Investors will also likely be focused on management's guidance for the current quarter. According to data from Visible Alpha, analysts currently expect Nvidia to generate operating EPS of $1.66 in its fiscal 2027 first quarter and revenue of about $71.5 billion. If Nvidia guides for more or less than these estimates, that's likely to move the stock in one direction or the other.
Beyond the pure numbers, investors will be trying to gauge what broader AI demand looks like based on Nvidia CEO Jensen Huang's comments, as well as what demand is like for Nvidia's most advanced chips and AI platform, including Blackwell and eventually Rubin, the company's upcoming platform.
Finally, I think investors will be very curious about whether Nvidia can restart chip sales to companies in China after a long pause due to geopolitical tensions between the U.S. and China. China is a material revenue opportunity for Nvidia, so if the company can restart sales, analysts may revise estimates higher.
Ultimately, investors should not be making short-term bets on near-term catalysts like earnings reports. If you are going to buy Nvidia, be prepared to hold the stock long-term and brace for volatility.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
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