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Investing.com - Headlining the earnings agenda this week will be much-anticipated quarterly returns from Nvidia, the semiconductor giant whose meteoric rise in recent years has made it a poster child of the artificial intelligence boom.
Nvidia’s stock price has soared by roughly 1,000% since the launch of OpenAI’s ChatGPT chatbot in late 2022, making the company the first to surpass $5 trillion in market value and granting its earnings a certain bellwether status that can sway much of a recently fretful mood around AI.
Additionally, shares of Nvidia carry an 8% weight in the benchmark 500 and about 10% in the tech-heavy Nasdaq Composite, leading some analysts to argue that the ramifications of the results could extend beyond the tech sector.
Given frothy stock valuations and a string of circular deals in the tech industry, many of which revolve around Nvidia’s cutting-edge chips, some observers have also become increasingly worried about the possibility that a "bubble" may be forming around the AI craze.
"[T[he rising tide of AI skepticism is occurring for (largely) legitimate reasons, and this will remain an overhang for tech, even if the Nvidia results/guidance are great," analysts at Vital Knowledge wrote in a note.
"In fact, ’great Nvidia results’ is ironically part of the problem as the company’s success is becoming mutually exclusive with the health of the overall AI ecosystem."
On average, analysts are anticipating Nvidia will post $30.53 billion in fiscal third-quarter net profit and revenue of $54.8 billion, according to LSEG data cited by Reuters.
For its January quarter, Nvidia is anticipated to guide for revenue of $61.8 billion and net income of $34.93 billion, FactSet and Jefferies Research data showed.
"Nvidia near-term is facing the tough task of meeting high (earnings) expectations and high skepticism around AI capital expenditures, likely only resolved when broader market volatility (shutdown, interest-rates) subsides," analysts at BofA Securities including Vivek Arya and Duksan Jang said in a note.
"We look for management to provide reassurance around demand and supply and believe muted sentiment [...] a contrarian positive heading into the print."