Key Takeaways
- AI chip giant Nvidia’s quarterly earnings report, due after the bell on Wednesday, could reinforce expectations for strong growth in businesses supplying data centers and amplify concerns about a deluge of industry-disrupting AI innovations on the horizon.
- Traders expect a large post-earnings move for Nvidia stock, which has more influence within the S&P 500 than five of the index’s 11 sectors.
AI chip giant Nvidia (NVDA) is slated to report quarterly results after markets close on Wednesday. The report lands at a precarious time for tech investors.Â
There’s been a sharp divergence in the performance of AI stocks this year. A memory shortage has been a tailwind for shares of data storage companies Sandisk (SNDK) and Western Digital (WDC), up 165% and 70% so far this year. On the flip side, software stocks like Intuit (INTU) and Workday (WDAY), both down roughly 40%, have been battered by worries AI deployments threaten to upend the industry.Â
Nvidia’s earnings report has the potential to be a wrecking ball or rocket fuel for the AI trade. Better-than-expected sales could reinforce Wall Street’s confidence in the AI infrastructure plays that have led the stock market for much of the past few years. Even a negative datapoint for Nvidia—specifically, profit margin pressure from soaring memory costs—could be a boon to stocks like Sandisk and Western Digital, whose margins would be expanding in kind.Â
Why This Is Important
Due to its dominance in the market for advanced chips, Nvidia is considered an AI bellwether—its earnings and outlook a reflection of AI demand. The AI rally has stumbled this year amid anxiety about returns on infrastructure investments and AI’s potential to upend entire industries.
If CEO Jensen Huang confirms Blackwell demand is on track with expectations and memory supply remains constrained, “then that’s another tailwind for Micron and the broader memory complex because it keeps the bottleneck narrative centered on memory supply and packaging,” said Shay Boloor, chief market strategist at Futurum Equities.
Strong results could also aggravate the anxiety hanging over industries that appear the most vulnerable to disruption from AI tools. A rosy sales forecast from Nvidia could signal AI demand will top expectations this year, increasing the sense of urgency for software companies threatened by large-scale AI deployments.Â
Then there’s Nvidia’s impact on the entire stock market. With a $4.8 trillion market capitalization, Nvidia is the world’s most valuable company and accounts for almost 8% of the S&P 500, more than the consumer staples and utilities sectors combined. A large move in Nvidia’s stock price—as is expected—can completely offset the moves of hundreds of other stocks in the index.Â
Nvidia’s earnings report is also a major driver of market sentiment. Strong results can reinforce confidence in the Magnificent Seven, which have lagged the broader market so far this year. Underwhelming earnings or a tepid outlook, meanwhile, could raise questions about the trajectory of AI spending, and increase pressure on hyperscalers like Microsoft (MSFT) and Alphabet (GOOG) to show the hundreds of billions they’ve already poured into the technology will pay off soon.Â
Nvidia shares were up 2% in midday trading Wednesday. The stock is down about 8% from the all-time high hit in late October but has gained roughly 50% over the past 12 months.
Update—Feb. 25, 2026: This story has been updated with additional commentary. A previous version of this article misidentified Shay Boloor.
