Nvidia's Q2 earnings to test resurgent AI trade

Nvidia, the leading chipmaker, is set to release its second quarter earnings report, a significant event for investors and analysts alike. While its competitors in the Big Tech sector have already reported their results, Nvidia's earnings announcement comes at a time when chip stocks are facing challenges due to concerns about the returns on their AI investments.

Cloud giants Microsoft, Amazon, and Google have recently reported strong growth in their cloud businesses, which has helped alleviate some of the worries. Nvidia is projected to report adjusted earnings per share of $2.09 and revenue of $92 billion for the quarter. This would represent a staggering 96% year-over-year increase in revenue.

The company's revenue is expected to surge by 107% year-over-year, with Data Center revenue projected to reach $85.4 billion and Hyperscaler revenue reaching $43.5 billion. Nvidia's revenue is heavily dependent on hyperscalers like Amazon, Google, and Microsoft, although these companies either develop their own chips or sell them to third parties, potentially threatening Nvidia's future.

Nevertheless, Nvidia continues to forge partnerships with various players in the AI ecosystem, including BlackRock, Blackstone, KKR, Apollo, Brookfield, and Goldman Sachs, who have pooled $500 billion to secure Nvidia's GPUs. Additionally, the company is collaborating with SB Energy and OpenAI to construct a massive 8-gigawatt data center in Ohio, which could be valued at up to $150 billion.