Nvidia Earnings Will Put The AI Trade to Another Test. Wall Street Expects a $92 Billion Quarter.

Nvidia is preparing to deliver one of the most closely watched earnings reports on Wall Street, with investors looking for evidence that the artificial intelligence boom still has enough momentum to justify the enormous sums pouring into chips, data centers and computing infrastructure.

The chip giant is expected to report fiscal second-quarter adjusted earnings of $2.09 per share on revenue of roughly $92 billion, according to Bloomberg consensus estimates cited by Yahoo Finance. That would represent a staggering 96% increase in revenue from a year earlier and another acceleration from the previous quarter.

But Nvidia's results will arrive at a particularly important moment for the AI trade. Chip stocks have struggled to maintain their momentum following a steep selloff in July, when concerns resurfaced over whether Big Tech companies will ultimately generate sufficient returns from the hundreds of billions of dollars they are spending on AI infrastructure.

Recent results from Microsoft, Amazon and Google helped ease some of those concerns. Strong growth in their cloud businesses showed continued demand for AI computing capacity. At the same time, investors have become increasingly sensitive to capital spending, with Google and Meta facing scrutiny over plans to continue pouring money into AI.

That puts Nvidia at the center of the debate as Wall Street expects Nvidia's Data Center business to generate more than $85.4 billion in quarterly revenue, a 107% increase from the same period last year.

Hyperscaler revenue is projected at approximately $43.5 billion, while sales to AI clouds, industrial and enterprise customers, or ACIE, are expected to reach $41.7 billion. Its PC, gaming console, workstation, robotics and automotive operations are now grouped within the company's Edge Computing segment, while Data Center sales are divided between hyperscalers and AI clouds, industrial and enterprise customers.

Nvidia still depends heavily on a relatively small group of hyperscale technology companies, including Amazon, Google and Microsoft. Those customers are spending aggressively on Nvidia hardware, but they are also developing their own AI chips as they attempt to reduce costs and dependence on outside suppliers.

That creates one of Nvidia's biggest longer-term risks. The same companies currently driving its extraordinary growth could eventually become increasingly formidable competitors.

Nvidia, however, is moving beyond simply selling GPUs and positioning itself deeper inside the financing and construction of the global AI infrastructure boom. Earlier this month, the company announced a partnership with BlackRock, Blackstone, KKR, Apollo Global Management, Brookfield and Goldman Sachs aimed at establishing financing platforms capable of mobilizing more than $500 billion in third-party capital for AI infrastructure.

The initiative could effectively expand the pool of money available to finance Nvidia-powered computing projects at a time when the cost of building AI data centers is becoming one of the industry's biggest challenges. Nvidia has also said it is backing SB Energy and OpenAI's plans for an enormous 8-gigawatt data center project in Ohio, with potential financing of up to $150 billion.