Market looks to perennial darling Nvidia to settle AI fears
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Nvidia CEO Jensen Huang signs autographs after arriving at Songshan Airport in Taipei, Taiwan, on Jan. 29. Photo: Lam Yik Fei/Bloomberg via Getty Images
Nvidia's latest earnings report will hit later Wednesday in an uncertain landscape marked by rising questions about the sustainability of the AI economy.
Why it matters: Nvidia is the darling of the AI boom, so its performance and outlook will be parsed for insights into where things are headed — and whether there's truly cause for concern.
The big picture: Big Tech's capital expenditures explosion is a welcome development for Nvidia. It's also unnerving investors.
- Alphabet, Amazon, Meta and Microsoft alone are expected to deliver capital spending of around $650 billion this year, up from $31 billion a decade ago.
- Capex growth expectations in 2026 include 100% at Alphabet, 75% at Meta and 50% at Amazon, according to Wedbush Securities analyst Dan Ives.
- "You're talking about a very, very significant escalation in capex getting pumped into the market," S&P Global Visible Alpha analyst Melissa Otto tells Axios. "So I think shareholders have stepped back and said, 'Whoa, that's cash that we're not getting. What about us?'"
For Nvidia, much of that cash is coming in the form of purchases of Blackwell, the most advanced chips it currently sells. Investors will be scrutinizing details about Blackwell orders, both past and future, and guidance on its next-gen platform, Vera Rubin.
- "I'll be laser-focused on what they're doing with Blackwell — that will be really important to see what the trajectory of that is," Otto says.
- S&P Capital IQ analysts are projecting total revenue of $66.2 billion and net income of $35.8 billion for the quarter — which would both be quarterly records for the company.
After a dystopian vision of the AI future startled investors on Monday, tech bulls expect Nvidia CEO Jensen Huang to do what he's regularly done in recent months — dispel fears of AI wreckage and declare the future bright.
- "Nvidia's earnings/guidance and general bullish commentary from Jensen will be a positive catalyst for tech stocks and give an important validation moment around global demand drivers/magnitude for the AI Revolution," tech bull Ives wrote in a research note.
The bottom line: "Investor debate will remain focused on what near-term commentary could mean for longer-term (2027/2028) growth," Stifel analyst Ruben Roy writes in a research note.
