Nvidia Corp.'s earnings report on Wednesday afternoon comes at a critical time for the US stock market with investors increasingly nervous about the outlook for artificial intelligence.
While most Wall Street pros are anticipating strong results from the chipmaker amid ballooning spending on computing infrastructure, there is less certainty about how its shares — and others — will respond at a time when fears about AI disruption and the staying power of heavy investments are dominating the tape.
“Even if they have tremendous numbers, we know the markets are really fickle,” said Ken Mahoney, president of Mahoney Asset Management.
After powering the market higher for much of the past few years, Nvidia shares have gone cold in recent months, rising just 3.4% since the start of the fourth quarter, as investors question the hundreds of billions of dollars customers like Alphabet Inc. and Microsoft Corp. are spending on AI. Meanwhile, investors have been fleeing sectors seen as potentially under threat from AI disruption.
Photo Credit: Bloomberg
The selloff is weighing on the S&P 500 with shares of members like Intuit Inc., Gartner Inc. and Workday Inc. down more than 39% since the start of the year. A Bloomberg index tracking the Magnificent Seven, which also includes Apple Inc., Amazon.com Inc., Meta Platforms Inc. and Tesla Inc., is down 5.5% in 2026.
Nvidia, however, is still the most valuable company in the world at $4.7 trillion, giving it enormous sway over the market-cap weighted S&P 500. The index has fallen more than 1% from a late January peak.
Nvidia's revenue is expected to jump 68% to $65.9 billion in its fiscal fourth quarter, which ended on Jan. 31. Adjusted earnings are anticipated to rise 72% to $1.53 a share, according to the average of analyst estimates compiled by Bloomberg.
Another metric investors will be watching closely is gross margin, a measure of profitability that came under pressure last year due to high production costs for Nvidia's Blackwell chips. The firm's adjusted gross margin is anticipated to be 75% in the fourth quarter, the highest in more than a year, and is projected to stay around that level in the current fiscal year.
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Investors want reassurances that such profitability can be sustained amid rising prices for memory chips and other input costs.
“Margins are potentially a risk factor,” said Melissa Otto, head of technology, media and telecommunications research at Visible Alpha. “The question's going to be around that gross margin coming into Q1 and then if they give any color for the rest of the year.”
Otto is also looking for updates on the status of Nvidia's Blackwell and upcoming Rubin chips. Nvidia Chief Executive Officer Jensen Huang said in October that the two chip lines were on track to generate half a trillion dollars in revenue over the next several quarters, a milestone the company said it would reach faster than initially expected.
China is also top of mind, even though Nvidia previously said that the fourth quarter won't include any data center revenue from the country. Still, investors will be looking for any update about the company's ability to sell into China after the Trump administration cleared sales of its older H200 chips.
“What Nvidia says about their guidance is important, what they say about their overseas sales and what they can sell is going to be really important,” said Luke Rahbari, chief executive officer of Equity Armor Investments.
The options market is pricing in about a 5% swing in either direction for Nvidia shares the day after earnings. The stock has declined the day after each of its last two reports.
Beyond the numbers, Huang's comments on the earnings call will also be closely monitored. Earlier this month, the CEO called the selloff in software stocks on disruption concerns “the most illogical thing in the world.” Since then, the fear-based selling has spread to dozens of other companies in a wide range of sectors, including wealth management and real estate services.
A positive reception for Nvidia could help boost sentiment for the AI pain trade, according to Rahbari.
“If Nvidia comes out and says, we're positive on this entire space, on this structure,” he said, “I think that rising tide lifts all boats, including software.”
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