Nvidia Earnings: Will It Break or Boost the Stock Market?
US stocks saw a mixed Wednesday as investors braced for Nvidia's highly anticipated earnings report, a crucial test for the tech-fueled summer rally. The Dow Jones Industrial Average (^DJI) climbed almost 0.4%, while the S&P 500 (^GSPC) edged up over 0.2% to secure a record close. The Nasdaq Composite (^IXIC) also saw a slight gain of 0.2%.
All eyes are on Nvidia (NVDA), with investor expectations sky-high. The AI chip giant is projected to announce record-breaking revenue and adjusted profit for the second quarter. However, concerns linger regarding President Trump's restrictions on chip sales to China, potentially impacting Nvidia's bottom line by an estimated $8 billion.
Nvidia's earnings are more than just a company event; they represent a pivotal moment for the broader AI sector, which has been a major driving force behind the stock market's bullish trend. Traders are bracing for a potential swing of approximately 6% – around $260 billion – in Nvidia's stock value following the earnings release, according to options data.
While the market largely shrugged off President Trump's controversial dismissal of Federal Reserve governor Lisa Cook, some subtle signs of unease are surfacing in the bond market. The 2-year Treasury yield experienced a slight increase after dipping to 3.65%, its lowest level since May. Meanwhile, the 30-year yield (^TYX) remains above 4.9%.
In other news, the European Union is reportedly expediting the removal of tariffs on all US industrial goods, potentially paving the way for reduced duties on EU auto imports. On the trade front, Trump's recently imposed 50% tariffs on Indian products have officially taken effect.
What Analysts Are Saying
Sevens Report Research’s Tom Essaye believes that Nvidia's report is not just the biggest event of the day, but possibly of the month. According to Essaye, a disappointment from Nvidia could send AI stocks and the entire market lower.
Key Takeaways:
- Nvidia's earnings are critical for the stock market.
- Trump's China chip restrictions pose a threat.
- AI sector's performance is closely tied to Nvidia.