The earnings report from Nvidia Corp. (NVDA) this Wednesday afternoon arrives at a critical moment for the U.S. Stock market, with investors increasingly nervous about the outlook for artificial intelligence (AI).
While most Wall Street professionals predict solid results from the chipmaker amid rampant 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 large investments are dominating market sentiment.
“Even if they have tremendous numbers, we know that markets are really volatile,” said Ken Mahoney, president of Mahoney Asset Management.
After driving the market higher for much of the past few years, Nvidia’s stock has cooled in recent months, rising only 3.8% since the start of the fourth quarter, as investors question the hundreds of billions of dollars that clients like Alphabet Inc. (GOOGL) and Microsoft Corp. (MSFT) are spending on AI. Meanwhile, investors have been fleeing sectors seen as potentially threatened by AI disruption.
The sell-off is weighing on the S&P 500, with stocks of constituents like Intuit Inc., Gartner Inc. And Workday Inc. Having fallen more than 40% since the beginning of the year. A Bloomberg index tracking the Magnificent Seven, which also includes Apple Inc (AAPL), Amazon.com Inc (AMZN), Meta Platforms Inc (META) and Tesla Inc (TSLA), has fallen 4.7% in 2026.
Nvidia, however, remains the world’s most valuable company, with a market capitalization of around $4.8 trillion, while its shares are up this Wednesday, giving it enormous influence over the S&P 500 index. The index has fallen by less than 1% since reaching its peak at the end of January.
Nvidia’s revenue is expected to surge 68% to $65.9 billion in its fiscal fourth quarter, which ended January 31. Adjusted earnings are forecast to increase 72% to $1.53 per 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 company’s adjusted gross margin is expected to be 75% in the fourth quarter, the highest in more than a year, and is expected to remain around that level in the current fiscal year.
Investors want assurances that this profitability can be maintained amid rising prices for memory chips and other input costs.
“Margins are potentially a risk factor,” said Melissa Otto, head of technology, media and telecom research at Visible Alpha. “The question is going to revolve around that gross margin as we enter the first quarter 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 CEO Jensen Huang said in October that the two chip lines are on track to generate half a trillion dollars in revenue in the coming quarters, a milestone the company said it would reach faster than initially expected.
China is also in focus, even though Nvidia previously said the fourth quarter will not include any data center revenue from the country. Still, investors will be listening for any updates on the company’s ability to sell in China after the Trump administration authorized sales of its older H200 chips. However, Nvidia has not yet sold any of those chips to China, according to David Peters, Deputy Assistant Secretary for Export Enforcement at the Department of Commerce, told the House Foreign Affairs Committee on Tuesday.
“What Nvidia says about its guidance is important, what they say about their sales abroad and what they can sell is going to be really important,” said Luke Rahbari, CEO of Equity Armor Investments.
The options market is pricing in around a 5% swing in either direction for Nvidia shares the day after earnings. The stock has fallen on the day following each of its last two reports.
Beyond the numbers, Huang’s comments on the earnings call will also be closely watched. Earlier this month, the CEO called the mass selling of software stocks over disruption concerns “the most illogical thing in the world.” Since then, the fear-based sell-off has spread to dozens of other companies across a wide range of sectors, such as wealth management and real estate services.
According to Rahbari, a positive reception for Nvidia could help boost sentiment for the AI pain trade.
“If Nvidia comes out and says, we’re positive in this whole space, in this structure,” he said, “I think a rising tide lifts all boats, including software.”
