Nvidia will report earnings after the U.S. market closes on Wednesday, putting Jensen Huang back in front of investors at a moment when expectations look different from the ones that defined the early AI trade.
Analysts on average expect second-quarter revenue of $92.18 billion, nearly double from a year earlier. That would mark the fastest growth in seven quarters, powered by data center revenue expanding by more than 100%. Nvidia, now valued at $5 trillion, has beaten analyst estimates for 14 straight quarters. In the previous quarter, net income rose 210% from a year earlier, far ahead of Wall Street’s 126% forecast.
Options pricing points to a quieter setup
Under normal circumstances, those numbers would make this one of the more tense earnings nights on the calendar. Options traders are sending a different message.
The market is pricing in a 5.4% move in Nvidia shares for the day after earnings, equal to roughly $280 billion in market value. That is larger than the total market capitalization of 90% of the companies in the S&P 500.
By Nvidia standards, though, the setup is restrained. Before the company’s May earnings report, the implied move was 6.5%. Over the past 12 quarters, Nvidia’s average actual post-earnings move was 7.4%. On that comparison, this is the calmest earnings expectation in the past two years.
Matt Amberson, founder of options analytics firm ORATS, said: 「This shows a certain complacency around Nvidia, and it also suggests the company has become more predictable.」
Chris Murphy, co-head of derivatives strategy at Susquehanna, was even more direct: 「At the start of the AI era, Nvidia could always surprise everyone, and 10%, 15%, or 20% moves were not unusual. That phase is basically over. There aren’t many people in the market who truly think they are going to catch everyone off guard with a huge beat and send the stock sharply higher.」
The stock is no longer outpacing the broader market
Nvidia’s share performance this year adds to that reading.
The stock is up 11.7% year to date, compared with an 11.8% gain for the S&P 500. The Philadelphia Semiconductor Index has risen 61% over the same period. The company selling the core hardware into the AI buildout has lagged the broader chip sector this year.
On Monday, Nvidia logged its seventh straight daily decline, its longest losing streak since 2022. Last month, it also briefly gave up the title of the world’s most valuable company to Apple.
In premarket trading on Tuesday, the shares rebounded about 1%, putting them on track to break the losing run. The report said that move appeared to be driven less by Nvidia itself and more by Brent crude falling toward $89. Kathleen Brooks, research director at XTB, said: 「The shift in sentiment has been helped by the drop in oil prices.」
What investors want goes beyond another beat
Sara Araghi, a portfolio manager at Franklin Equity under Franklin Templeton, said on Bloomberg Television on Tuesday that Nvidia needs to deliver more than a strong set of numbers. Investors also want a clear explanation of how the company plans to deploy capital and sustain its spending plans.
「The market needs to see more detail on these investments and the value of those investments,」 she said.
Araghi also pointed to a disconnect. Nvidia’s forward price-to-earnings ratio for the next 12 months is now about 21 times, a level she said does not match the company’s expected revenue and profit growth. In her view, that multiple shows the market is already pricing in slower growth ahead.
「The growth is extraordinary, but the slowdown is coming, and unfortunately the market is looking at next year,」 she said.
Margins and cash use are key checkpoints
Araghi laid out two specific items to watch.
The first is gross margin. Nvidia’s gross margin of about 75% is unusual for a hardware company, and she said investors will examine it line by line as raw material costs rise. To offset higher memory costs, Nvidia has already raised prices. Servers based on the Vera Rubin and Grace Blackwell architectures, due in early 2027, will be priced more than 15% higher for major customers.
The second is what the company does with its profit growth. Araghi said earnings matter because they give Wall Street confidence that Nvidia’s free cash flow is large enough to support the investment it needs to make. She added: 「And they have to use that money to buy back stock.」
Bloomberg Intelligence analysts issued a similar warning: a routine combination of a beat and higher guidance may no longer be enough to lift sentiment.
Capital flows have become the real earnings question
According to the report, the bigger issue this quarter is where the money is going. Over the past month, Nvidia has moved well beyond the role of a chip supplier.
The company worked with six of Wall Street’s largest financial institutions to arrange a $500 billion AI financing plan, promising support for loans to customers that cannot afford its chips.
Last week, Nvidia agreed to provide as much as $105 billion in backing for OpenAI’s 20-year lease of a large data center in Ohio. The report described that as one of Nvidia’s biggest AI financing commitments.
During the same week, Nvidia took a stake in Cloverleaf Infrastructure, a company focused on securing power for data centers.
It also reached a $6 billion agreement with startup Poolside to develop a powerful open-weight AI model.
Brian Mulberry, chief market strategist at Zacks Investment Management, gave those moves a label: 「This makes them something like a central bank for the AI sector.」 Mulberry, who owns Nvidia shares, also spelled out the risk: 「The real risk is being completely exposed to AI with no diversification. For this to work, adoption of AI tools has to keep growing.」
That is where the concern over a so-called circular trade comes in. If Nvidia helps finance customers and those customers use the money to buy Nvidia chips, investors are left asking whether the revenue reflects genuine demand or demand created by Nvidia itself.
Huang’s defense has been straightforward. The logic, he has said, is that Nvidia has ample cash and can use it to support fast-growing but still unprofitable customers as they build out infrastructure. He also said the Ohio commitment does not amount to circular financing.
For that argument to hold, those customers ultimately need to make money. Recent signals have not been encouraging. The report said OpenAI recently told investors that its second-quarter revenue grew only 18% and that losses continued to widen.
The backdrop is getting tougher
Nvidia is releasing results into a far less friendly environment than before.
Political resistance to AI infrastructure is spreading. More than 500 towns across the United States have already restricted data center construction. At the same time, a bond selloff has pushed borrowing costs to multiyear highs. Last week, the 30-year U.S. Treasury yield touched its highest level in 19 years. Hyperscale cloud companies that once looked like cash machines are relying more heavily on debt to keep building, and big tech data center spending is projected to exceed $730 billion this year.
Mulberry used a sports analogy to describe the weight of the report: 「This is becoming more like the World Cup final than the Super Bowl. That’s how big it’s getting.」
Investors are watching the shift from Blackwell to Vera Rubin
At the center of the earnings debate is one practical question: how quickly Nvidia can move from Blackwell to Vera Rubin, with shipments expected to begin this fall.
Russ Mould, investment director at AJ Bell, summed up the stakes this way: 「Nvidia’s upcoming results have the power to push the whole market up or pull it down. The clue investors are looking for is whether demand for AI is starting to lose momentum.」