When Nvidia announces its earnings on Wednesday, investors will see how the tech giant has been performing amid the turbulence of President Donald Trump’s trade policies and concerns about whether artificial intelligence has been overhyped.
Why is Nvidia so Important?
Nvidia specializes in creating graphics processing units (GPUs) that power AI, including the Blackwell B200, which is marketed as the world’s most powerful chip. The California-based company’s chips have become essential to the world’s largest tech firms, including Microsoft, Meta, Amazon, and Alphabet, since AI entered the mainstream with the launch of OpenAI’s generative AI chatbot, ChatGPT, in November 2022.
The company’s portfolio also includes data centers and gaming. Nvidia reported an annual revenue of $130.5 billion for the last fiscal year, which ended in late January.
What Will the Market Look for in Nvidia’s Earnings Report?
Analysts will examine various metrics, including the company’s quarterly revenue. Nvidia’s revenue has been growing at a breakneck pace over the past several years, fueled by the AI boom and the surge in demand for its chips. According to company filings, Nvidia reported triple-digit revenue growth for five consecutive quarters between mid-2023 and 2024. Since then, annual revenue growth has been in the high double digits.
Last quarter, the company reported a revenue of $44.1 billion, a 69 percent increase from the same period a year ago. While these figures are impressive, the firm’s explosive performance has also raised questions about how long its stellar run can last. Ahead of its upcoming earnings report—which covers the second quarter of fiscal year 2026—Nvidia has stated it expects revenue of $45 billion, plus or minus 2 percent. Analysts have predicted revenue of up to $46 billion, or 53 percent year-on-year growth.
The earnings report is also expected to show signs of the impact from the Trump administration’s tariff war. In April, Trump banned Nvidia from selling its H20 chip—specifically designed for the Chinese market—to China. At the time, Nvidia said the ban would cost the company $8 billion. Trump later reversed the ban after Nvidia agreed to share 15 percent of its H20 chip sales with the US government, a deal finalized on August 11, two weeks after the end of its second quarter.
Why are there Concerns that AI is Overhyped?
As Silicon Valley pours billions into AI, some observers, such as OpenAI CEO Sam Altman, have questioned whether a bubble is forming. “Are we in a phase where investors as a whole are overexcited about AI? My opinion is, yes,” Altman told The Verge in a recent interview.
He is not alone in his concern. Analysts have drawn parallels to the collapse of the “Nifty Fifty” in the 1970s, according to Arun Sai, a senior multi-asset strategist at Pictet Asset Management in the UK. The Nifty Fifty was a group of 50 of the most valuable companies in the US, including Xerox and IBM. Despite being highly profitable, these firms became significantly overvalued in the late 1960s and early 1970s. When the bubble burst following the 1973-74 stock market crash, the value of Nifty Fifty stocks fell by more than 50 percent. “They were fantastic companies, but they were trading at the wrong price,” Sai told Al Jazeera. “This is the old notion that you could be a great company, but not a great stock if the price is wrong.”
What’s Happening with the Magnificent Seven?
Five decades later, some investors are questioning whether the “Magnificent Seven”—Nvidia, Alphabet, Amazon, Apple, Meta, Microsoft, and Tesla—could also be overvalued. Valuations have soared into the trillions of dollars on the back of the AI boom, although there is some divergence within the group, with Apple and Tesla recently performing less well.
Amazon recently announced it expects to spend $85 billion on AI over the next year, while Microsoft predicts it will spend $100 billion. AI has been one of the few bright spots in an otherwise slowing economy that has seen upheaval since Trump took office. “Growth is dwindling in other sectors, but there is this very small, niche, concentrated pocket of hyper growth,” Sai said. “This suddenly becomes a much bigger contributor to US GDP growth than it would have been in a normal phase of the cycle.”
Corporate spending on AI has been compared to an arms race, but tech giants—and Nvidia customers—will eventually need to demonstrate to investors that their investments in the sector will lead to profits. US tech giants are already facing challenges from companies like China’s DeepSeek, which made headlines in January by unveiling a powerful but much cheaper AI model.
So far, innovation does not appear to be translating into higher returns. A recent survey by the Massachusetts Institute of Technology (MIT) found that 95 percent of enterprises reported no return on their AI investments despite the billions poured into the sector.
How Much Could Nvidia’s Earnings Affect the Market?
Due to its sky-high valuation, Nvidia alone accounts for almost 8 percent of the S&P 500—the benchmark index of 500 top companies listed on the US stock market. This means Nvidia’s earnings have the potential to have a significant impact, for better or worse, on the stock market as a whole.
In the past, large movements in Nvidia’s stock price have triggered swings in the S&P 500 of 1 percent or more. After Nvidia’s earnings results in February sent its share price down more than 8 percent, the S&P 500 fell by 1.6 percent.
