Key Takeaways:
- Nvidia (NVDA) is set to release Q2 earnings, with revenue expected at $46 billion and EPS at $1.00–$1.02.
- Export restrictions on China’s H20 chips pose risks, though a U.S. revenue-sharing deal could lead to a presumption of H20 chips.
- OpenAI’s CEO, Sam Altman, potentially warns of an AI bubble.
Nvidia (NVDA), the world’s most valuable publicly traded company with a market cap above $4 trillion, is set to release its highly anticipated Q2 fiscal 2025 earnings report on Wednesday after the market closes. The results are widely seen as a barometer for the broader AI trade that has powered U.S. equities to record highs.
Tech giants such as Microsoft, Amazon, Alphabet and Meta have allocated planned investments worth $325 billion in AI infrastructure this year. Nvidia’s leading position in the AI chip market will immensely benefit from the high demand by tech giants.
Analyst Expectations
Consensus estimates call for revenue of roughly $45.9–46 billion and adjusted earnings per share (EPS) of around $1.00–$1.02 against revenue of $30.04 billion and EPS of $0.68 from last year, according to FactSet and Visible Alpha data.
If the Q2 earnings report surpasses analysts’ expectations, then Nvidia would report a sales growth of 53% year-over-year (YoY). However, it would not be as impressive as the growth observed in the previous quarter, which reported a growth of 69% and below 122% reported in Q2 2024. However, Nvidia has beaten estimates for 11 consecutive quarters, and another strong beat would reinforce its role as the cornerstone of AI infrastructure.
Moreover, the head of investment strategy at Saxo Bank, Jacob Falkenscone, believes that NVIDIA shares are currently trading at a premium valuation ahead of its Q2 earnings report. Falkenscone told clients in a research note –
Nvidia has little margin for error; if growth or margins fall short, the downside could be sharp.
Chief Market Strategist from Freedom Capital Market, Jay Woods, said this in a weekly newsletter on Nvidia’s price action after its earnings release –
The stock’s average move after an earnings release is +/- 7.4%, so just an average move will make an impact on the entire market.
Woods believes that it is the most important stock in the world, and its importance cannot be underestimated. This is possibly due to the weight it holds, major indices such as the S&P 500 and the Nasdaq 100, which are at 7.68% and 14.5% respectively, according to SlickCharts. Key semiconductor ETFs will also be largely affected by the Q2 earnings report.
Nvidia Could Face Geopolitical Risks
The current tariffs and export restrictions on the H20 chips specifically designed for China could have contributed $8 billion in revenue for Nvidia. According to analysts at KeyBanc, if H20 was included in the guidance, it could have boosted future revenue projections by about $2 billion to $3 billion.
Nonetheless, the U.S. government has entered into a deal with Nvidia to allow sales of H20 chips. Nvidia will have to pay 15% of its income generated in China in return for licenses to market its H20 AI processor.
Sam Altman:
Most recently, Sam Altman, the CEO of OpenAI, compared today’s AI craze to the dot-com boom, saying that while the internet was transformative, investors originally overestimated. As reported by The Verge, Altman thinks we could potentially be in an AI bubble.
When bubbles happen, smart people get overexcited about a kernel of truth
Are we in a phase where investors are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes.
According to a report from MIT on the state of AI in business published in 2025, enterprises that have incurred nearly $30-40 billion expenditure on generative AI, approximately 95% of these firms have yet to see a positive return on investment.
Whether Nvidia delivers another record quarter or shows signs of slowing, Wednesday’s report could set the tone for AI stocks and perhaps the entire market for months to come.
