Chip stocks fall with Nvidia after data center rev disappointment
Investing.com -- Nvidia (NASDAQ:NVDA) earnings after the bell on Wednesday are set to test both the AI trade and broader market sentiment, with options markets signaling the potential for a record swing.
Contracts imply a 6.1% move in either direction, which translates into about $270 billion in market value — a shift larger than the market capitalization of most S&P 500 companies.
Despite the staggering figure, it is actually the smallest expected post-earnings swing since the first quarter of 2024, when options priced in a bigger move.
Over the last eight quarters, realized earnings-day swings have averaged 5.9%, consistently lower than the 8.6% average implied by options.
Ahead of the results, analysts remain focused on whether Nvidia can deliver another beat-and-raise quarter.
Piper Sandler expects “another positive quarter” with upside potential from both U.S. hyperscaler spending and renewed demand from China.
The broker, which raised its price target on the stock to $225 from $180, forecasts roughly $45.1 billion in July-quarter revenue, in line with guidance, but sees potential for stronger results once China sales resume under the new licensing framework.
It estimates China demand could add about $6 billion in the October-quarter sales, ramping further in 2026.
Moreover, Piper Sandler analysts said they are “encouraged by hyperscaler commentary around capex plans” for the second half of 2025 and next year, “which should continue to pressure NVDA to meet this demand.”
Bank of America is similarly constructive, flagging “healthy beat/raise” potential on strong demand for Nvidia’s latest Blackwell architecture and resilient AI capex across major cloud players.
The bank projects July-quarter sales of $47 billion versus the $45 billion company guide and sees October-quarter revenues reaching $54 billion, or up to $60 billion if H20 chip shipments to China restart.
Gross margins are expected to approach 73–74% by the third quarter, with an incremental boost possible if written-down inventory is utilized. It estimates fiscal 2026 revenues could rise toward $210–215 billion, with pro forma EPS between $4.70 and $4.80, above consensus.
Looking further ahead, BofA believes Nvidia’s fiscal 2027 earnings could approach $7 a share, compared with the current $5.87 consensus, if the AI market grows to about $341 billion from its $309 billion estimate, sustaining a 60% annual growth rate in 2026, in line with 2025.