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. This losing run was Nvidia’s longest in almost four years, raising questions about investor sentiment towards artificial intelligence stocks before a significant earnings release.
During Tuesday’s session, Nvidia traded between $210.02 and $214.66, resulting in a market capitalization of approximately $5.2 trillion. The rebound was supported by a broader recovery across technology and semiconductor stocks, with the Nasdaq Composite gaining 0.66% and the S&P 500 and Dow Jones Industrial Average advancing 0.32% and 0.30%, respectively.
Falling oil prices and lower Treasury yields also contributed to improved market sentiment, with the US 10-year Treasury yield declining to around 4.64% and crude oil prices retreating after less aggressive US sanctions targeting Iran.
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, August 26. Analysts expect revenue of approximately $92.18 billion, slightly above Nvidia’s own guidance of $91 billion, representing a 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%, but this outlook did not include any Data Centre computing revenue from China, leaving room for updates that could influence future expectations.
However, simply beating revenue and earnings estimates may not suffice for a strong share-price reaction, as Nvidia has consistently exceeded Wall Street expectations. Investors are likely to focus more closely on third-quarter guidance, with current estimates pointing to fiscal Q3 revenue of approximately $104.2 billion.
Rubin Platform Ramp Moves Into Focus
Investors will be keenly interested in Nvidia’s transition from its Blackwell architecture to the next-generation Vera Rubin platform. Details on Rubin’s production schedule, customer adoption, shipment volumes, and expected revenue contribution will be critical. The new platform is anticipated to be a significant growth driver as hyperscalers expand their AI data-centre infrastructure.
Any indication of accelerating Rubin shipments could bolster expectations for Nvidia’s continued rapid growth. Conversely, production delays or slower customer transitions could pressure future revenue forecasts.
Capital expenditure from major cloud companies like Microsoft, Alphabet, Amazon, and Meta Platforms will also be crucial, as these firms account for a significant portion of global AI infrastructure spending.
Rising Memory Costs Test Nvidia’s Margins
Reports indicate that Nvidia customers are facing AI server price increases of over 15%, adding uncertainty before earnings. These increases affect systems using Grace Blackwell and Vera Rubin processors scheduled for delivery in early 2027, driven partly by rising costs for high-bandwidth memory and other components.
Passing these higher costs to customers could help Nvidia protect its gross margin, but it may also lead to delays in projects or reduced orders as customers weigh the overall expense of building AI data centres.
Investors will be watching closely to see if Nvidia maintains its 75% gross-margin outlook and how management expects memory inflation to impact profitability during the Rubin ramp.
Options Market Prices a 5.4% Nvidia Stock Move
Options markets suggest that Nvidia shares could move approximately 5.4% in either direction following the earnings release, representing a potential market-value change of around $280 billion. This 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.
The actual reaction will likely depend on fiscal Q3 guidance, Rubin demand, gross margins, China sales, and hyperscaler capital expenditure. With Nvidia valued at over $5 trillion, even minor changes to future growth expectations could lead to substantial movements in the stock and the wider semiconductor market.