Nvidia has a lot of questions to answer, and none of them are about demand for its AI chips

This afternoon, we’ll get Nvidia earnings, and it comes at a tenuous time for the company and the AI trade as a whole.

Fund managers think companies (read: hyperscalers) are investing too much. The good news about demand is known: Nvidia effectively preannounced its revenue outlook when CEO Jensen Huang touted more than $500 billion in orders for its flagship chips through calendar year 2026. And shares recently traded near the bottom of the $180 to $210 range they’ve been oscillating around since the end of September.

Analysts are expecting the company to deliver $55.2 billion in sales in its fiscal Q3 2026, with adjusted earnings per share of $1.26.

That roughly $8.4 billion in revenue growth from Q2 to Q3 would be more than the total sales generated by over 370 S&P 500 companies in their most recent quarter.

One oft overlooked aspect of the AI boom is that it came out of nowhere, at a time when there was excess capacity in semiconductor production. That’s no longer the case.

If Nvidia’s GPUs are the brains of AI, you still need a host of other chips to serve as the supporting elements of the nervous system. On that note, high-bandwidth memory prices have been surging as supply remains ultra-tight.

When it comes to how markets will interpret the results, Wedbush Securities analyst Dan Ives takes an optimistic and straightforward view: the sheer size of the numbers put up by the chip designer will be too impressive to ignore.

“Datapoints from Nvidia this week will be important to convince ‘on the fence investors’ that this AI spending trend is an unparalleled moment in modern tech history and is NOT a bubble moment,” he wrote.

JPMorgan is also forecasting an earnings beat and upward move, and recommends a bull call spread ahead of the report.

The Takeaway

The most valuable company in the world has earned that moniker despite, rather than because of, how investors have reacted to its quarterly reports as of late. Just once over its past five reporting periods has the chip designer gained in the week following earnings. This time, there should be no questions about the appetite for Nvidia’s AI chips. What’s in doubt is how much supply chain snarls might impact its ability to meet that colossal demand, whether margins might face some pressure along the way, and if competition will eat away at its dominant market position over time.