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AI chip giant Nvidia, which has a market cap of over $3 trillion and is currently second only to Apple, "needs to deliver exceptional results" on its upcoming Wednesday earnings call "to justify its towering $3 trillion valuation," Lukman Otunuga, senior market analyst at trading broker FXTM, told Entrepreneur over email.
The highly-anticipated earnings call will be a "crucial" moment for the markets; Nvidia's stock price could swing 10.4% either up or down following the announcement, Otunuga said. That means that Nvidia's market cap could move by about $300 billion after the call, a move larger than each of the market caps of Salesforce, McDonald's, and Walt Disney.
"A strong earnings report could drive markets to new highs, while any sign of weakness might trigger a notable pullback, making Nvidia's performance a potential market mover this week," Otunuga stated.
Related: Nvidia and the Magnificent Seven Have 'Immense Returns,' but Strategists Say There Are Risks
Nvidia is "the most important stock on planet Earth," the Goldman Sachs trading desk once said.
Nvidia is expected to hit $28.7 billion in revenue for the second quarter of fiscal year 2025, which ended on July 30 — a 112.6% increase from the $13.5 billion reported last year. Analysts also predict that Nvidia will post earnings per share of $0.65 compared to $0.27 last year.
Nvidia CEO Jensen Huang during a keynote address in March 2024. Photo Credit: Justin Sullivan/Getty Images
Otunuga says that Nvidia faces challenges like competition from AMD and Intel and recent shipment delays to one of its new AI chips.
Nvidia has grown over 1,000% since October 2022, but that growth hasn't been linear. After reaching the top of the market cap charts in June and becoming the most valuable company in the world, Nvidia plunged in value and lost about $900 billion in market cap over the next seven weeks.
The stock has since rebounded and added hundreds of billions of dollars in market value, but its volatility remains a concern for Wall Street.
Nvidia's top clients also include other members of the "Magnificent Seven," a group of top-performing tech companies including Meta, Amazon, and Google that rely on Nvidia for AI chips. This means Nvidia's performance could affect its peers.
Nvidia reports earnings on Wednesday after market close at 2 p.m. PT. The company's stock was up over 165% year-to-date at the time of writing.
Related: Here's How Much Investing $10,000 in Nvidia When It Went Public Would Be Worth Now
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