The Ultimate Test of the AI Frenzy: Global Markets Hold Their Breath for NVIDIA's Earnings Report

NVIDIA will release its latest financial report this Wednesday, which will not only test the company's performance but also serve as a key indicator for assessing whether the AI boom can continue to drive the rise of U.S. stocks. As the absolute leader in the global AI chip market, NVIDIA's performance has transcended that of a single company, becoming a barometer for the entire tech industry and even market sentiment.

Analysts expect the company to achieve revenue of $46 billion in the second quarter, a year-on-year increase of 53%. Although this growth rate is lower than the previous quarter's 69% and the over 250% growth rate at the beginning of 2024, it still demonstrates strong growth momentum for a giant enterprise with a market capitalization of $4 trillion.

However, as NVIDIA's financial report is released, concerns about the high valuations of AI-related companies are intensifying. Last week, a pessimistic report from the Massachusetts Institute of Technology and comments from OpenAI CEO Sam Altman triggered a decline in tech stocks, leading investors to question whether the sustained rise of the AI sector over the past few months can continue.

NVIDIA has become a barometer of market confidence

NVIDIA's stock price has risen over 30% this year, making it the first publicly traded company to surpass a market capitalization of $4 trillion. Due to its massive market cap, NVIDIA has significantly contributed to the 9% rise in the S&P 500 index, influencing the direction of the entire market.

"This is no longer just a single stock," said Arun Sai, multi-asset portfolio manager at Pictet Asset Management. "It's very unusual—people are interpreting the overall economic situation through it."

Jon Zauderer, head of North American professional sales at Citigroup, pointed out: "NVIDIA is not just an important holding; they are the locomotive of this AI train. The market is extremely attentive to every statement they make."

Daniel Newman, CEO of research firm The Futurum Group, shares the same view, believing that "any unexpected surprise"—whether a significant miss in revenue or business guidance—"will be the fastest way to throw the market into chaos."

Valuation concerns and slowing growth raise attention

NVIDIA's current valuation is about 40 times its expected earnings for the next year, far exceeding the valuation levels of overall tech stocks. According to FactSet data, the Nasdaq 100 index, which is tech-heavy, is trading at about 28 times its expected earnings for the next year, significantly higher than the 25-year average of 22 times.

Although NVIDIA's expected revenue growth is set to decline from earlier triple-digit figures to 53%, Morgan Stanley semiconductor industry analyst Joseph Moore stated that the market should not overly worry about the slowing growth.

"People are more concerned about growth relative to peers, and from that perspective, they are currently performing exceptionally well. The market is satisfied with their growth situation," he said It is worth noting that despite strong financial reports, NVIDIA's stock price does not always rise accordingly. In February of this year, NVIDIA reported earnings and revenue that exceeded market expectations, yet the stock price still fell by 8.5% the following day. At that time, the emergence of highly efficient large models like DeepSeek raised market concerns about chip demand.

The Outlook for the Chinese Market Becomes a Focus

Analysts will closely monitor NVIDIA's outlook for the Chinese AI chip market.

According to a report from CCTV News last month, the U.S. has approved the sale of H20 chips to China. A previous report from Deutsche Bank indicated that if the license is granted, NVIDIA's revenue for the third fiscal quarter could increase by $50 billion (slightly lower than Wall Street's consensus of $53 billion), and including the expected shipments of AI GPUs to China in the 2026 calendar year, the company's earnings per share could still increase by 10% (currently about $6), even after paying a 15% "license fee" to the U.S. government.

An earlier article also mentioned that Morgan Stanley's Joseph Moore team believes how management assesses opportunities in the Chinese market is a "huge variable" affecting the final guidance. Currently, although some licenses have been approved, the future approval outlook remains unclear. Recent concentrated media coverage has further amplified these concerns.

Major Tech Clients Continue to Increase AI Investments

Capital expenditure is another focus of this financial report.

NVIDIA's largest clients—Microsoft, Google, Meta, and Amazon—have all indicated in recent weeks plans to invest heavily in AI infrastructure, with expected spending reaching $350 billion this year.

The graphics processors produced by NVIDIA are widely used to train models that support products like OpenAI's ChatGPT and Google's Gemini. The ongoing investment commitments from these major tech companies provide strong support for NVIDIA's performance in the coming quarters.

Moore added, "At these valuation levels, the macro outlook and NVIDIA's own performance, or micro factors, are both very important. (In February of this year) people questioned the macro and micro conditions... (but now) it should be a very strong result."