Although semiconductor juggernaut Nvidia Corp. (NASDAQ:NVDA) has become practically synonymous with the dramatic rise in artificial intelligence, the tremendous success also serves as a point of caution. True, NVDA stock has skyrocketed in recent years on the back of its graphics processors, which power the latest AI workloads. At the same time, the market's non-linearity imposes corrective spells when fundamentals get out of sync.At first glance, circumstances appear rather auspicious for NVDA stock. Since ...

Core Viewpoint - Nvidia's upcoming earnings report is highly anticipated as it will reflect the company's performance in the AI chip market, which significantly influences market sentiment [1][2]. Recent Performance and Outlook - In Q2 of fiscal 2026, Nvidia's revenue increased by 56% year-over-year to $46.7 billion, driven by strong demand for data center chips, which also saw a 56% year-over-year rise to $41.1 billion [4]. - Non-GAAP earnings per share rose by 54% year-over-year to $1.05, indicating robust volumes and high gross margins [4]. - For Q3 fiscal 2026, Nvidia expects revenue of approximately $54 billion, representing about 54% year-over-year growth compared to $35.1 billion in the same period last year [6]. Market Dynamics - The AI race is central to Nvidia's strategy, with the Blackwell platform being a key focus for growth [5]. - Despite impressive growth, the pace is moderating compared to previous quarters, which saw year-over-year growth rates of 94% and 78% [6]. Valuation and Risks - Nvidia's current market capitalization is around $4.6 trillion, with a price-to-earnings ratio of 53, indicating high expectations for continued strong growth [11]. - Risks include potential slowdowns in revenue growth due to capital spending cycles, competition from cloud giants designing their own AI chips, and geopolitical factors affecting demand [9][10]. - The stock reflects significant confidence in sustained customer spending, but there is a risk of a valuation reset if growth slows unexpectedly [11][12]. Investment Considerations - For long-term investors willing to accept volatility, a small position in Nvidia may be justified as part of a diversified portfolio [13]. - More cautious investors might consider waiting for a more favorable entry point [13].

Jensen Huang, co-founder and CEO of Nvidia Corp., speaks during a news conference in Taipei on May 21, 2025.Nvidia continues to see massive growth from sales of graphics processors, with demand for artificial intelligence infrastructure showing no signs of cooling.But for the AI chipmaker, the mood is different heading into Wednesday's earnings report than it's been in recent quarters. There's one big reason why: China.On April 9, the Trump administration sent Nvidia a letter, and said it was requiring an e ...