Nvidia Stock Rises 2.19% as $280bn Earnings Swing Looms

Key Takeaways

• Nvidia shares rose 2.19% to $213.05, ending their longest losing streak since September 2022.
• Wall Street expects fiscal Q2 revenue of roughly $92 billion and adjusted earnings of about $2.09 per share.
• Options markets imply a 5.4% post-earnings move, potentially changing Nvidia’s market value by approximately $280 billion.

Nvidia ends its seven-session losing streak

Nvidia shares climbed 2.19% on Tuesday to close at $213.05, snapping a seven-session losing streak ahead of the AI chipmaker’s fiscal second-quarter earnings report.

The losing run was Nvidia’s longest in almost four years and had raised questions about whether investors were reducing exposure to artificial intelligence stocks before one of the most closely watched earnings releases of the quarter.

Nvidia traded between $210.02 and $214.66 during Tuesday’s session, leaving the company with a market capitalisation of approximately $5.2 trillion.

The rebound was supported by a broader recovery across technology and semiconductor stocks. The Nasdaq Composite gained 0.66%, while the S&P 500 and Dow Jones Industrial Average advanced 0.32% and 0.30%, respectively. AMD rose almost 4.9%, Micron gained around 2.5%, and Taiwan Semiconductor Manufacturing’s US-listed shares added 1.78%.

Falling oil prices and lower Treasury yields also improved market sentiment. The US 10-year Treasury yield declined to around 4.64%, while crude oil prices retreated after the latest US sanctions targeting Iran proved less aggressive than some investors had feared.

Wall Street expects Nvidia revenue to nearly double

Nvidia is scheduled to release its fiscal Q2 2027 results after the US market closes on Wednesday, 26 August.

Analysts expect revenue of approximately $92.18 billion, slightly above Nvidia’s own guidance of $91 billion, plus or minus 2%. That would represent growth of roughly 97% from the $46.7 billion reported in the same quarter last year.

Adjusted earnings are forecast at around $2.09 per share, nearly double the $1.05 recorded one year earlier.

Nvidia previously guided for an adjusted gross margin of approximately 75%, plus or minus 0.5 percentage points. Importantly, its outlook did not include any Data Centre computing revenue from China, leaving room for any China-related update to influence forward expectations.

However, simply beating the headline revenue and earnings estimates may not be enough to produce a strong share-price reaction. Nvidia has exceeded Wall Street expectations consistently, meaning investors are likely to focus more closely on third-quarter guidance.

Current estimates point to fiscal Q3 revenue of approximately $104.2 billion. Management’s ability to reach or exceed that figure could determine whether the recent rebound develops into a more sustained recovery.

Rubin platform ramp moves into focus

One of the biggest issues for investors will be Nvidia’s transition from its Blackwell architecture to the next-generation Vera Rubin platform.

Markets will be looking for details on Rubin’s production schedule, customer adoption, shipment volumes and expected revenue contribution. The new platform is expected to become an increasingly important growth driver as hyperscalers expand their AI data-centre infrastructure.

Any indication that Rubin shipments are accelerating could support expectations that Nvidia can maintain rapid growth beyond the current quarter. Conversely, production delays, supply-chain constraints or a slower customer transition could place pressure on future revenue forecasts.

Capital expenditure from Microsoft, Alphabet, Amazon, Meta Platforms and other major cloud companies will also remain important. These companies account for a significant proportion of global AI infrastructure spending, making their investment plans a key indicator of demand for Nvidia’s accelerators and networking products.

Rising memory costs test Nvidia’s margins

Reports that Nvidia customers face AI server price increases of more than 15% have added another layer of uncertainty before earnings.

The increases reportedly affect some systems using Grace Blackwell and Vera Rubin processors that are scheduled for delivery in early 2027. Higher prices are being driven partly by rising costs for high-bandwidth memory and other memory components used in advanced AI servers.

Passing higher component costs on to customers could help Nvidia protect its gross margin. It may also demonstrate that demand remains strong enough for customers to accept higher prices.

However, rising server costs could increase the overall expense of building AI data centres. This may encourage some customers to delay projects, reduce orders or accelerate investment in competing accelerators from AMD and internally developed chips from large technology companies.

Investors will therefore be watching whether Nvidia maintains its 75% gross-margin outlook and how management expects memory inflation to affect profitability during the Rubin ramp.

Options market prices a 5.4% Nvidia stock move

Options markets imply that Nvidia shares could move approximately 5.4% in either direction following the earnings release. Based on the company’s current valuation, that represents a potential market-value change of around $280 billion.

The expected move is smaller than the 6.5% priced before Nvidia’s May results and below the stock’s average post-earnings move of around 7.4% over the previous 12 quarters.

This suggests traders expect less volatility as Nvidia’s financial performance becomes more predictable. Nevertheless, a $280 billion swing would still be larger than the entire market value of many major US companies.

The actual reaction will likely depend on the combination of fiscal Q3 guidance, Rubin demand, gross margins, China sales and hyperscaler capital expenditure. With Nvidia now valued at more than $5 trillion, even relatively small changes to future growth expectations could produce a substantial movement in the stock and the wider semiconductor market.