Nvidia earnings risks and the peers with the most to lose

Nvidia is set to release its Q2 FY2027 earnings on August 26, with analysts projecting revenue of $92 billion and earnings per share (EPS) of $2.08. However, the stock's peer group faces significant risks, with Marvell Technology (MRVL) potentially bearing the brunt of any disappointment in Nvidia's guidance. MRVL reports its earnings the day after Nvidia, on August 27, which creates a compounding risk factor.

Currently, MRVL's shares are trading at a 175% year-to-date (YTD) gain and 235% over the past year, making it the most stretched multiple in the peer group. ARM Holdings (ARM) carries a 3.91 beta, nearly double Nvidia's 2.22, and trades at a 244x trailing earnings multiple, driven largely by a single 25% revenue growth figure. This stretch in valuation could be compressed if AI capex slows down.

Advanced Micro Devices (AVGO) is scheduled to report on September 2, one week after Nvidia, and its stock has already dropped 13% following its last earnings report, despite beating estimates. This suggests the market is penalizing any signs of deceleration in AI chip revenue. With custom AI chip revenue becoming a larger portion of Nvidia's business, Broadcom's results increasingly reflect the spending patterns of hyperscalers, as indicated by Nvidia's earnings.

Despite still maintaining positive EPS estimates from Rosenblatt Securities, Nvidia's stock has already retreated from recent highs, and recent news flow has been mixed. Insider selling of around $1.7 billion in shares over the past year, coupled with increases in AI server prices and geopolitical headwinds from Iran sanctions, contribute to the mixed sentiment surrounding Nvidia.

Rosenblatt maintains a $325 price target for Nvidia, expecting a beat in earnings, but the bar is set high.