TLDR
- Nvidia reports Q2 earnings Wednesday, with Wall Street expecting EPS of $2.09 and revenue of $92.3 billion, roughly double year-over-year
- NVDA stock snapped a 7-day losing streak Tuesday, closing up 2.19%, its longest losing streak since 2022
- Data Center revenue is forecast to top $85.4 billion, up 107% year-over-year
- Despite beating earnings estimates in each of the last 8 quarters, NVDA stock has fallen the next day on 6 of those occasions
- Key risks include fading AI data center demand, rising political opposition to data centers, and growing competition from hyperscalers building their own chips
Nvidia is set to report its second quarter results Wednesday afternoon, and all eyes on Wall Street are on the AI chip leader once again.
Analysts expect adjusted EPS of $2.09 and revenue of $92.3 billion. That would represent roughly 96% growth in revenue year-over-year.
NVDA stock closed at $213.05 on Tuesday, up 2.19% after ending a 7-day losing streak, its longest since 2022.
High Expectations, Mixed Track Record
Nvidia has beaten Wall Street consensus on key metrics in each of the last 8 quarters. But the stock has declined the following day on 6 of those occasions.
NVDA has underperformed the S&P 500 over the past year and is down about 1% over the last three months. Its forward P/E ratio sits below that of the S&P 500, despite projected EPS growth of 89% this year.
Data Center revenue, Nvidia’s biggest segment, is expected to reach $85.4 billion, up 107%. Hyperscaler revenue alone is projected at $43.5 billion, with ACIE revenue at $41.7 billion.
Last quarter, Nvidia updated its reporting structure, splitting Data Center into Hyperscalers/AI Clouds and Industrial and Enterprise. PC, gaming, robotics, and automotive revenue now falls under a new Edge Computing segment.
Big Tech cloud results from Amazon, Microsoft, and Google helped ease some investor concern about AI spending returns. But Google and Meta rattled markets with plans for higher capital expenditure.
Key Risks Heading Into the Print
The four major hyperscalers, Amazon, Microsoft, Alphabet, and Meta, are expected to collectively spend over $700 billion on AI data centers this year. Some investors are questioning how much further that spending can grow.
Political opposition to new data center construction is also rising. A July poll found 63% of likely 2026 midterm voters opposed nearby data center construction, up from 42% in December.
Competition is another factor. AMD and newer chip makers are pushing into Nvidia’s space. More importantly, Nvidia’s biggest customers are building their own AI chips, reducing their reliance on NVDA hardware.
Nvidia is countering by acting as a financial backer on large deals. It is supporting a half-trillion dollar SoftBank and OpenAI data center project in Ohio, and recently helped establish a $500 billion GPU securitization pool with BlackRock, Blackstone, KKR, Apollo, Brookfield, and Goldman Sachs.
Rental prices for Nvidia’s servers remain strong and have continued to rise even as new supply comes online.
Nvidia reports Wednesday afternoon.
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