Nvidia’s Earnings Preview: Analysts Raise Expectations Leading In

Nvidia Corporation (NVDA) is set to release its highly anticipated second-quarter fiscal year 2026 earnings report today, a moment that could well ripple through markets, and particularly the AI trade. Trading at $182.55 per share, up 0.43% pre-market, Nvidia's performance will be under intense scrutiny as a bellwether for the AI market's sustainability.

The stakes are extraordinarily high. Nvidia's influence is undeniable, accounting for approximately 8% of the S&P 500. This means its performance is not just a company-specific event; it's a significant indicator for the overall health and direction of the stock market.

With analysts forecasting earnings per share (EPS) of $1.01 on revenue of $46.13 billion for the current quarter, representing a strong 53.58% year-over-year profit growth, the pressure is on for Nvidia to deliver and justify the market's lofty expectations. The company does have a history of beating the street, with each of the four reports over the past year coming in with EPS beats above 5%.

One of the most pressing concerns is the impact of the ongoing trade struggles between the U.S. and China. China represents a substantial portion of Nvidia's revenue, accounting for 13% last year.

Recent developments, including Nvidia's agreement to pay 15% of its China sales for export licenses and Beijing's push for domestic firms to reduce reliance on Nvidia chips, have injected considerable uncertainty into the company's revenue projections. Reports indicate that Nvidia has even paused production of its China-focused H20 chips, while simultaneously developing a more powerful alternative, highlighting the delicate balancing act the company must perform.

These trade headwinds have already impacted Nvidia's financial outlook. Analysts have excluded H20 sales from their second-quarter forecasts, and Nvidia previously indicated that U.S. export restrictions could reduce July-quarter sales by $8 billion, contributing to a $4.5 billion charge in the prior quarter. Despite these challenges, the consensus remains optimistic,, with relentless demand for AI chips from major tech firms driving revenue.

Beyond the immediate financial figures, Nvidia's earnings report will serve as a crucial gauge of the AI market's sustainability. The company's dominance in producing chips for large-scale data centers has made it a central player in the AI boom. Nvidia's stock has soared since the launch of OpenAI's ChatGPT in early 2023, recently surpassing a $4 trillion market value. However, concerns about a potential bubble are growing. Nvidia's stock trades at a high multiple of 40 times its projected earnings, reflecting the market's high expectations.

The broader tech sector and stock market have also benefited significantly from the AI surge, with the S&P 500 climbing 68% since late 2022. However, this enthusiasm is tempered by cautionary voices. An MIT report highlighting the high failure rate of AI pilots (95%) and OpenAI CEO Sam Altman's own warnings about an AI bubble have fueled skepticism about the long-term viability of current valuations.

Despite all this, analysts have been raising expectations on NVDA into the earnings print, with various upside price targets coming thick and fast. The average price target on the street of $194.22 demonstrates bullish sentiment leading in, with Baird ($225 from $195) and Stifel ($212 from $202) the latest to revise upwards.

There have also been 8 upside EPS revisions in the month into earnings, with none to the downside. This could be a blockbuster, popcorn at the ready.