After the U.S. market closes on Wednesday, Jensen Huang will pick up the microphone.
The average estimate from analysts is: second-quarter revenue of $92.18 billion, nearly doubling year-on-year, the fastest growth rate in seven quarters, driven by more than doubling growth in the Data Center business. This $5 trillion company has exceeded analyst expectations for 14 consecutive quarters — last quarter's net profit grew 210% year-on-year, while Wall Street's forecast was 126%, falling short by almost half.
In theory, this should be a nerve-wracking evening.
But the pricing in the options market tells a different story.
What Are the Options Saying?
Traders have priced in a volatility of 5.4% for the day after the earnings report, corresponding to a market cap swing of roughly $280 billion — larger than the total market capitalization of 90% of the S&P 500's components.
That sounds scary, but consider the frame of reference: before the May earnings, the market's priced volatility was 6.5%; over the past 12 quarters, its actual average post-earnings volatility was 7.4%. In other words, this is the calmest expectation in the last two years.
Matt Amberson, founder of options analytics firm ORATS, put it bluntly: "This shows a certain complacency with Nvidia, and also means it's become more predictable."
Chris Murphy, co-head of derivatives strategy at market maker Susquehanna, was even more direct: "At the beginning of the AI era, Nvidia always gave everyone a surprise, with moves of 10%, 15%, 20% — that phase is basically over. Very few people in the market genuinely believe they will shock everyone with a massive beat and then see the stock surge."
One piece of evidence is its stock price this year.
Year-to-date, Nvidia is up 11.7%, while the S&P 500 is up 11.8% — it has slightly underperformed the broader market. Meanwhile, the Philadelphia Semiconductor Index has surged 61%. The biggest seller of shovels in the entire AI construction boom has underperformed the entire shovel industry this year. On Monday, it closed lower for its seventh consecutive session, its longest losing streak since 2022.
Last month, it also temporarily ceded its title as the "world's most valuable company" to Apple.
It rebounded about 1% in pre-market trading Tuesday, potentially ending this losing streak. But the driver of this rebound was less about Nvidia itself and more about Brent crude oil falling to around $89. According to Kathleen Brooks, research director at XTB: "The shift in sentiment is helped by the drop in oil prices."
So What Is the Market Really Waiting For?
Sara Araghi, portfolio manager at Franklin Equity (part of Franklin Templeton), made this requirement very clear on Bloomberg TV Tuesday: Nvidia needs more than just strong earnings; it needs to detail its capital deployment plans and how it will maintain its spending plans.
"More detail on these investments, the value of these investments — I think that's what the market needs to see."
She pointed out a divergence: Nvidia's forward 12-month price-to-earnings ratio is now about 21 times, completely misaligned with its projected revenue and profit growth. This multiple indicates the market is already pricing in a growth slowdown.
"It's phenomenal," she said, "but the deceleration is coming, and unfortunately, the market is looking at next year."
She also gave two specific checkpoints.
First, gross margins: Nvidia's roughly 75% gross margin is highly unusual for a hardware company and will be scrutinized word-for-word amid rising raw material costs. To hedge higher memory costs, Nvidia has already been raising prices: servers based on the Vera Rubin and Grace Blackwell architectures, expected in early 2027, will be priced over 15% higher for key customers.
Second, the use of that money. Profit growth is important because it reassures Wall Street that "the free cash flow they're generating is enough to support the investments they need to make." She added: "And they have to use that money to buy back stock."
Bloomberg Intelligence analysts issued the same warning: a routine "beat and raise" may no longer be enough to boost sentiment.
Where Is the Money Really Flowing?
This is the real question for this earnings report. Over the past month, Nvidia has acted beyond the scope of a chip company:
It teamed up with six of Wall Street's largest financial institutions to arrange a $500 billion AI financing plan, pledging to backstop loans for customers who can't afford its chips.
Last week, it agreed to guarantee up to $105 billion for OpenAI to lease a large data center in Ohio for 20 years — one of its largest AI financing commitments.
Also last week, it took a stake in Cloverleaf Infrastructure, a company focused on securing power for data centers.
It also reached a $60 billion deal with startup Poolside, aiming to develop a powerful open-weight AI model.
Brian Mulberry, chief market strategist at Zacks Investment Management, coined a name for these moves: "This makes them the central bank of AI in a way." He holds Nvidia stock but also noted the risk: "The real risk is full exposure to AI with no diversification at all. For this to work, it's critical that the adoption rate of AI tools continues to grow."
The core doubt here is the "circular trade": If I lend you money to buy my chips, is my revenue real demand, or is it manufactured by myself?
Jensen Huang's defense is straightforward: the logic is simple, the company has ample cash and can use it to support fast-growing but still unprofitable customers in their build-out. He said the Ohio guarantee does not constitute circular financing.
For this argument to hold, the premise is that those customers must eventually become profitable. And recent signals on that front aren't encouraging: OpenAI recently told investors its second-quarter revenue grew only 18%, with losses widening.
Jensen Huang Faces More Than Just Himself Tonight
Nvidia's earnings report arrives against a very unfriendly backdrop.
Political backlash against AI is widening. Over 500 towns across the U.S. have restrictions on data center construction. Bond selling has pushed borrowing costs to multi-year highs, with the 30-year Treasury yield hitting a 19-year high last week. The former cash-printing machines — the hyperscale cloud providers — are increasingly relying on debt to fund their build-out, and total data center spending by big tech companies is projected to exceed $730 billion this year.
Zacks' Mulberry used a metaphor to describe the weight of this earnings report: "This is becoming more like the World Cup final than the Super Bowl. It's just gotten that big."
The answer investors are really looking for boils down to just one thing: How fast can the transition from Blackwell to Vera Rubin be? Shipments are expected to begin this fall.
Russ Mould, investment director at AJ Bell, put it bluntly: "Nvidia's upcoming results have the power to push the whole market up or drag it down. The clue investors are looking for is — is AI demand starting to lose momentum?"
