Nvidia results to test strength of rocketing AI spend
In the wake of the recent Anthropic-driven sell-off in software stocks, Nvidia’s earnings report on Wednesday will serve as a key litmus test for the extraordinary growth fuelling the AI buildout.
The chip behemoth, now almost synonymous with the AI boom, is expected to post revenue of between $65.6bn (£48.48bn) and $65.9bn for the quarter ended in January, broadly in line with its own guidance of $65bn.
Earnings per share are forecast at $1.52, up from $0.89 the year prior, implying expected growth of roughly 65 to 70 per cent. For the current quarter ending in April, consensus expectations sit closer to $71.7bn.
Those margins would insinuate that pricing power is holding as Jensen Huang’s firm scales production of its latest chip models.
In the previous quarter, the Silicon Valley giant reported revenue of $57.01bn, ahead of guidance, with net income rising to $31.9bn. Data centres accounted for a mega $51.2bn of that total.
The company’s rapid expansion and subsequently raised expectations have been reflected in its share moves.
After hitting a new record of $212.19 in October, Nvidia has traded largely between $180 and $190.
It is now trading broadly flat year to date, and has been lagging the wider US market over the last three months.
Its forward 12-month price-to-earnings ratio has slowed to around 26.9 from above 36 in late 2025, pointing to some moderation in valuation, despite strong earnings forecasts.
Given its size and influence, the semiconductor giant’s update carries weight beyond its own balance sheet.
Nvidia now accounts for close to eight per cent of the State Street SPDR S&P 500 ETF, and nearly seven per cent of the broader US Market Index.
Over the past three years alone, it has contributed roughly 14 per cent of cumulative returns in that broader benchmark.
Investor scrutiny
The anticipation around Nvidia’s results have only been magnified amid closer scrutiny of mass AI spend across the tech sector.
UBS has estimated that Microsoft, Amazon, Alphabet, Meta and Orcale together could spend around $700bn this year, with much of that sum directed towards AI infrastructure.
Amazon alone has pencilled a much as $200bn this year, while Alphabet is reportedly targeting around $185bn.
For Nvidia, whose GPUs sit comfortably at the heart of those data centres, that spending is directly reflected onto demand.
Recent comments from customers, as well as strong results from Taiwan Semiconductor Manufacturing (TSM) have also been seen as supportive of continued production ramp-up.
That being said, investors are beginning to worry about the returns from this investment cycle, with concerns bubbling about whether the scale of capex may weigh on free cash flow at the hyperscalers.
Questions on whether supply constraints or pricing competition could pressure margins at the chipmaker have also risen.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said Nvidia “continues to defy the law of large numbers”, with revenue growth this quarter expected to approach 70 per cent.
Elsewhere, external factors such as export controls and customs-related concerns will play into Wednesday’s review, with the latter complicating some shipments to China.
However, analysts have reported limited financial impact in the near term.