Can Nvidia keep meeting the market’s high expectations?

Nvidia's (NASDAQ:NVDA) speculators were this week positioned ahead of Wednesday's second-quarter earnings report.

AI-related demand for high-powered processors, the kinds that Nvidia specialises in, has been the factor in the chip-maker's emergence as ‘the world’s biggest’ company, with a market capitalisation above $3 trillion.

Throughout its rise - 170% this past year alone – investors have come to expect big numbers as these quarterly earnings reports come along.

It remains to be seen whether the AI bandwagon can keep motoring ahead at the pace that investors have become accustomed to.

What can be seen, was Thursday’s 2.7% share price decline ahead of next Wednesday’s financial results.

Wall Street analysts stay bullish

Analysts on Wall Street remain optimistic, or at least they do in the preview reports they publish, with many expecting Nvidia to exceed earnings forecasts due to the sustained demand for its AI processors.

The likes of Citi and Goldman recently repeated 'buy' ratings for the share - and, in aggregate a total of 66 stock analyst see it that way, whilst eight others have it as a 'hold' and none see the stock as a 'sell'.

Nvidia’s own guidance for quarterly revenue is pitched at an eyewatering $28 billion, whilst the consensus analyst forecast, according to Zacks Investment Research, is slightly higher at $28.24 billion – which, if realised is more than double the total a year ago.

Earnings per shares is modelled at 0.63 cents per share, according to analyst consensus compiled by Zacks.

Nvidia’s leadership in the AI processor market, where it holds an 80% share, continues to drive its performance.

But, competition from companies like AMD is intensifying.

Also intensifying is the expectations in the market – especially among the army of retail investors staked in Wall Street’s number 1 AI play.

Not only will Nvidia seek to meet expectations on key metrics for the past quarter, and sufficiently wow with its guidance for the next – it will also have to cut an appropriately upbeat tone in regards to its ability to keep its supply up with rampant demand for AI chips.

In this regard, focus will be on the commentary around Nvidia’s next-generation Blackwell chips, and the timing of their roll-out.

In New York, on Thursday, Nvidia shares were down $5.12 or 3.98% at $123.38.