$92 Billion Nvidia Earnings Could Make or Break the AI Trade

Nvidia (NVDA) reports second-quarter earnings Wednesday, and Wall Street projects record sales near $92 billion. Analysts also expect net income to climb 95% to more than $51.5 billion, extending its rapid growth. The report could ripple through the broader market. Nvidias outlook shapes spending across chipmakers, cloud providers and the wider artificial intelligence (AI) trade. Wall Streets Growing Dependence on Nvidia Nvidia has beaten earnings estimates for 14 straight quarters. Last quarter, net income grew 210% year over year, far outrunning Wall Streets 126% forecast, according to FactSet data. Even so, that track record has raised the bar. Nvidia enters the report on its longest losing streak since 2022. Analysts have pushed their sales estimate to $92 billion, up from $78 billion at the start of the year. Nvidias stock has performed just under 2% better than the SP 500 over the last 12 months. Image Source: Trading View The stakes extend beyond one chipmaker. OpenAI recently told investors its revenue rose just 18% last quarter as losses deepened. Hyperscalers are leaning more on debt to fund data centers. That has fed worries that AI spending has become the markets biggest risk. Nvidia has stepped in to backstop that spending. It joined a $500 billion AI financing plan with banks and took a stake in power supplier Cloverleaf Infrastructure. Some Traders Are Bracing for a Pullback Nvidia stock has fallen the session after each of its last four earnings reports, despite beating estimates. Options markets now price a 5.3% swing after Wednesdays report. That tops the stocks 4.8% average post-earnings move over the past year, per Option Research Technology Services. Some of the most active contracts have been puts betting on a drop from Fridays $214.75 close. Those bets target $205 to $210, per Cboe Global Markets data. Rising memory prices and borrowing costs have fed concern that AI spenders could pull back. Not everyone is hedging, though. HSBCs Frank Lee raised his price target to $360 from $325, echoing Bank of Americas bullish target. He cited Nvidias supplier partnerships and its role in open-source AI. Brian Mulberry, chief market strategist at Zacks Investment Management, told the Wall Street Journal. Its kind of becoming more and more like the World Cup final than the Super Bowl at this point. Its just gotten to be that big. Wednesdays report will show whether Nvidias growth can still outrun the expectations Wall Street keeps raising.