The most valuable company in the world walked into its own earnings report on the back foot. Nvidia fell for seven consecutive sessions heading into this week — its longest losing streak since 2022 — shedding roughly 7% while the S&P 500 gave up just 1.2%. The stock snapped that skid Tuesday with a 2.2% gain, then drifted through Wednesday's session ahead of a report scheduled for after the closing bell.
For a company expected to nearly double its revenue year over year, the setup is unusual. It is also the point.
The Numbers Wall Street Wants
Analysts expect fiscal second-quarter revenue of roughly $92 billion, against company guidance issued in May of $91 billion plus or minus 2%. Adjusted earnings are pegged near $2.09 per share, close to double the year-ago figure. Data center revenue is projected between $85.4 billion and $85.7 billion, which would be more than 100% growth from a year earlier. Net income estimates cluster around $51.2 billion with gross margins near 75%.
Those figures would be extraordinary at almost any other company. Here they are close to a formality: Nvidia has exceeded its own guidance for thirteen straight quarters, though the size of the beat has compressed steadily — from 22.8% in the second quarter of fiscal 2024 to 4.6% in the most recent quarter.
The number that actually moves the stock is the third-quarter outlook. Consensus sits near $103.7 billion, which would be Nvidia's first quarter above $100 billion. Jefferies is more aggressive, modeling $95 billion for the reported quarter and $108 billion in guidance.
Why Beating Isn't Enough
Nvidia has declined the day after reporting in six of the past eight quarters, including each of the last four — despite meeting or exceeding estimates on revenue, earnings and forward guidance every time. Scale is part of the arithmetic. With a market capitalization above $5 trillion, every 10% move requires roughly $500 billion in market value to change hands.
As one preview framed the dilemma, a $92 billion print "even if it technically beats the company's guidance, may fail to satisfy investors who have already raised their expectations in advance."
Not everyone reads the pre-earnings weakness as a warning. "It's a great stock to have in your portfolio, it's trading at a very reasonable multiple and growing its earnings and its revenues and its gross margins at a tremendous pace," said Art Hogan of B. Riley Wealth. All 28 analysts tracked by TradingKey rate the shares a Buy, with an average target of $304.73 against a recent price near $210. Firm targets range from JPMorgan's $280 to Cantor Fitzgerald's $350.
The Capex Question Behind the Print
The broader stake is whether the AI buildout keeps compounding. Industry capital expenditures are now projected to exceed $1 trillion this year, with hyperscaler spending forecasts recently lifted from about $795 billion to roughly $815 billion. Nvidia's commentary on cloud-provider budgets carries more weight than its own quarter, because those budgets are the demand.
Complicating the read: Nvidia has made 66 investments totaling roughly $40 billion in AI companies, and has guaranteed financing on deals — an arrangement critics describe as circular, in which the supplier helps fund its own customers.
Markets were quiet ahead of it all. The S&P 500 hovered near 7,678 at midday Wednesday, little changed, with the Nasdaq off 0.1% and the Dow down 0.2%. July PCE inflation had landed that morning at 3.7% headline and 3.3% core, slightly hot. The 10-year Treasury yield ticked up to 4.67%. Gold slipped 0.6% to about $4,609 an ounce; silver held near $68.73.
Fed Chair Kevin Warsh delivers his first Jackson Hole keynote Friday. Between an AI print and a policy speech, the two pillars of this year's rally get tested in the same 48 hours.
Sources: Yahoo Finance, Axios, TradingKey, The Motley Fool, Zacks, CNBC, Forbes Advisor