Nvidia Earnings Take Center Stage as Markets Await Key Signals, Here's What to Watch

Nvidia will release its Q2 earnings after the US market closes on Wednesday. Many expect the numbers to be huge, but most investors are focused on what CEO Jensen Huang would share about the months ahead.

Nvidia stock steadies as Wall Street makes bold call

The report comes after a bumpy few weeks for the shares. The stock had fallen for seven straight sessions, its longest losing streak since 2022, before starting to recover. Shares climbed about 2.2% on Tuesday. This suggests some investors are getting back in ahead of the results.

However, the stock is still down by 6% from where it started last week but is up over 13% since the start of the year.

Wall Street's expectations are quite steep. Analysts polled by Bloomberg forecast adjusted earnings of $2.09 a share on revenue near $92 billion, which would be a growth of 96% to 99% from the same quarter last year. 

That figure is just above Nvidia's guidance of $91 billion. Data center revenue has also been projected to climb by over 100% year-over-year, with some estimates putting it as high as $86.3 billion. The company has beaten Wall Street's estimates in 22 of its last 24 quarters, which explains the bold forecasts.

Customer concentration is still a worry 

The major concern hanging over the report is a concentration risk. A large share of the company’s revenue still comes from Amazon, Google, and Microsoft, each of which is developing its chips to reduce reliance on outside suppliers. That makes Huang's comments about demand heading into 2027 more important than the numbers in the earnings release.

Some investors are also rethinking what holding Nvidia could mean for their portfolio. Investor Dustin Quasney said the company's web of equity stakes and financing deals with AI firms has changed the nature of the investment.

"Today, you are buying that same chip company plus a venture and equity portfolio in AI companies," he said, adding that Nvidia's fortunes are more tied to whether its customers can turn its AI spending into profits. 

Quasney also said he wants the company’s leadership to be more transparent about that risk.  "I want to hear from management about the reasoning, the risk framework, and the path to returns," he said. 

He currently rates the stock a Hold, even as he expects Nvidia's operating performance to stay strong. "They can, and I believe they will continue to do so for at least the next two years," he said.

Most analysts are really bullish despite some level of uncertainty. The company holds a unanimous Strong Buy rating based on 29 analyst reviews in the past three months, according to TipRanks. They set an average price target of $304.67, implying a 47% upside from its current price.

Options traders expect a calmer reaction this time

Interestingly, the options market isn't bracing for fireworks this time. Implied volatility following the earnings report is at around 5.4%, the lowest level since August 2021, according to data from options analytics firm ORATS. 

Matt Amberson, founder of ORATS, said this pattern has been seen over Nvidia's last eight earnings reports. In those times, price swings came in smaller than what options pricing had implied. That history looks to have cooled expectations for a move either way this time.