Nvidia has spearheaded much of the artificial intelligence boom to become one of the stock market’s biggest companies, as tech giants continued to spend heavily on its chips and data centers required to train and operate their AI systems.
The company is now worth over $3 trillion, with its dominance as a chipmaker cementing Nvidia’s place as the poster child of the AI industry ahead of its latest financial results Wednesday.
Wall Street expects the company to report second-quarter adjusted earnings of 65 cents per share on revenue of $28.74 billion, more than double what it earned in the comparable quarter one year ago, according to FactSet.
In the past three quarters, revenue has more than tripled annually, with the vast majority of growth coming from the data center business.
Global stocks were poised near record highs on Wednesday, with the next move riding on results at Nvidia, while sterling hovered near a 2-1/2-year high as traders bet that Britain will lag the U.S. in cutting interest rates.
Nvidia's stock price has been up some 3000% since 2019, and with a market capitalization of $3.2 trillion, a move in its shares affects the entire market, making the release of financial results a high-stake.
According to Reuters analysis, second-quarter revenue will likely double, although that may disappoint expectations. Options pricing shows traders anticipate a near 10% – or $300 billion – swing in market value, likely the largest earnings move of any company ever.
The results at the "so-called 'most important company in the world,'" stand between Wall Street and fresh record highs, noted Capital.com analyst Kyle Rodda, and set the tone for the sector.
"The company's revenue and sales guidance is a barometer of AI capex, with inferences to be drawn about the health of the other mega-cap tech names," he said.
The S&P 500 went up about 0.2% overnight and futures were steady in Asia, while Nasdaq 100 futures fell by 0.1% and FTSE futures rose by 0.2%.
Demand for generative AI products that can compose documents, make images and serve as personal assistants has fueled sales of Nvidia’s specialized chips over the last year, but Wall Street is also looking for any indication that AI demand is waning.
The Santa Clara, California-based company carved out an early lead in the AI applications race, partly because of founder and CEO Jensen Huang's successful bet on the chip technology used to fuel the industry.
The company is no stranger to big bets. Nvidia’s invention of the graphics processor unit, or GPU, in 1999 helped spark the growth of the PC gaming market and redefined computer graphics.
Nvidia is set to release its quarterly earnings after the market closes Wednesday.