Options data show traders expect the stock to swing about 6% in either direction once the results are out. While lower than its long-term average of 7%, the projection shows investors may feel more confident about Nvidia’s direction after months of massive gains.

Chris Murphy, co-head of derivatives strategy at Susquehanna, believes the company’s influence stretches beyond its own stock. “The ripples out of Nvidia might be more interesting than the actual move for Nvidia. A lot of these really high-flyer, speculative AI names have come off a lot, but Nvidia is basically back right below its all-time high.”

However, the results will test investor sentiment and also weigh heavily on how the company scales its increasingly fraught relationship with China.

Nvidia recently struck a deal with Washington requiring it to share 15% of revenue from China in exchange for export licenses. The move has been criticised at home and complicated abroad, as Beijing urges local firms to cut back on orders over security concerns. 

Reports show Nvidia has asked some suppliers to pause production of its China-specific H20 chips, while at the same time designing a more advanced processor for the market.

Jamie Meyers, senior analyst at Laffer Tengler Investments, noted that: “We’ve got to get clarity on these two governments first, whether China wants the chips and whether the administration is going to allow it. And if so, how is that going to work?”

China accounted for 13% of Nvidia’s revenue last year. But given that U.S. approval for certain chip exports came late in the quarter and Beijing’s objection is still unresolved, analysts are reluctant to price in meaningful revenue from H20 shipments.

Nvidia itself had warned in May that U.S. curbs would slash about $8 billion from its July-quarter sales, forcing a $4.5 billion charge in the previous period.

Despite these issues, demand for Nvidia’s chips from global tech giants including Meta and Microsoft remains strong, keeping the AI chip market hot. Analysts expect Nvidia to post a 53.2% revenue jump to $46.02 billion for the quarter, though that is far below the triple-digit growth rates that once defined its surge.

CEO Jensen Huang’s comments will be highly monitored, especially given recent market jitters that AI stocks may be overpriced. Nvidia shares have risen more than 34% this year, outpacing both the chip index and the S&P 500, but the momentum has cooled compared with the past two years.

Analysts see Nvidia guiding third-quarter revenue to about $52.96 billion, up 51% year-on-year. Piper Sandler estimates roughly $6 billion could come from China, though margins will take a hit.

Bernstein projects that the U.S. revenue-sharing deal could shave one percentage point off Nvidia’s overall profitability, contributing to an expected drop in adjusted gross margin from 76% to 72.1% this quarter.

Matt Amberson, founder of ORATS, spoke on Nvidia’s recent course: “It’s just a Goldilocks time for Nvidia.”

Per Reuters, company’s market capitalisation climbed to $3.86 trillion, putting it ahead of Microsoft’s $3.69 trillion valuation and making it the new front-runner in the space.

Nvidia’s surge comes on the back of its fiscal 2025 results, which showed an astonishing 114% year-on-year revenue jump to $130.5 billion. Its net income grew 145% to $72.9 billion. 

Most of that growth is concentrated in its data centre division, which now contributes over 80% of its total revenue, driven largely by hyperscalers like Microsoft, Amazon, and Meta who are aggressively expanding AI workloads.

Microsoft may not be far behind, with its valuation close on Nvidia’s heels. It is still doing great thanks to its investments in OpenAI, enterprise Copilot tools, and its AI-powered Azure cloud services. 

But for now, Nvidia sits at the top, powered by massive infrastructure deals and real-world deployment of its H100 and upcoming Blackwell GPUs, which are supporting the most complex AI systems across the globe.

Again, Meta’s market cap rose 14% to $1.86 trillion, Broadcom followed with a 13.9% increase to $1.3 trillion and Amazon also gained 7%, climbing to $2.33 trillion. All three benefited from strong investor confidence in their AI strategies and cloud infrastructure plays.

Meanwhile, Tesla was the outlier, its valuation slipped by 8.3% to $1.02 trillion. The drop came after a high-profile clash between CEO Elon Musk and U.S. President Donald Trump. 

Musk’s objection to Trump’s spending bill and the President’s response, threats to cut federal subsidies for Tesla and SpaceX, resulted in a 14% one-day drop in Tesla shares, wiping out $150 billion in value. The episode triggered investor jitters and regulatory speculation that has yet to settle.

Apple, though still among the top three with a $3.1 trillion market cap, has seen its momentum cool. Its December 2024 peak of $3.92 trillion is still unmatched. Slowing iPhone sales and delayed integration of advanced AI technologies have held back its valuation while rivals capitalise on faster innovation cycles.

Meanwhile, analysts are preparing for a new benchmark. “We believe both Nvidia and Microsoft will hit the $4 trillion market cap club this summer and then over the next 18 months the focus will be on the $5 trillion club … as this tech bull market is still early being led by the AI Revolution,” said Daniel Ives of Wedbush Securities.

This decline is attributed to growing worries about a possible recession in the United States, which has caused a ripple effect across global financial markets.

Investors are increasingly anxious about the health of the US economy, particularly in light of recent data showing continued sluggishness in manufacturing activity. 

This unease was further worsened by the US government’s decision to issue subpoenas to Nvidia and several other technology companies as part of an ongoing investigation into artificial intelligence (AI) practices. 

The market reaction was swift, with Nvidia’s stock losing 9.5% of its value, equating to a $279 billion (£212.9 billion) being wiped off its market capitalisation.

The broader tech sector also took a hit, with shares of major US technology firms such as Alphabet, Apple, and Microsoft experiencing sharp declines. 

On Tuesday, the Nasdaq index, which is heavily weighted towards technology companies, fell by over 3%, while the S&P 500 dropped by more than 2%. The slump in Nvidia’s stock is seen as a key driver of these losses.

The impact of this downturn was not limited to the United States. Asian markets opened on Wednesday with significant losses, led by Japan’s Nikkei 225, which fell by 4.4%. 

South Korea’s Kospi and Hong Kong’s Hang Seng Index also saw substantial drops of 3% and 1.3%, respectively. Major technology firms in the region, including Taiwan’s TSMC and South Korea’s SK Hynix, mirrored Nvidia’s losses, reflecting widespread investor concern.

The upcoming US non-farm payrolls report, due on Friday, is now a focal point for investors, who are looking for indicators of how the Federal Reserve might adjust interest rates in response to economic conditions. 

Market sentiment suggests that there is growing scepticism about the likelihood of rate cuts, further fuelling the downward trend in stock prices.

Swetha Ramachandran, a fund manager at Artemis Investment Management in London, noted that Nvidia’s sharp decline could also be tied to the US Department of Justice’s demands for the company to provide evidence related to antitrust issues. 

She suggested that this, combined with the firm’s own forecasted slowdown in growth—from 122% in the second quarter to an expected 80% in the third—has contributed to a realignment of investor expectations.

Meanwhile, oil prices have also been affected by the global economic slowdown. Brent crude fell to $73.14 per barrel, and US crude dropped to $69.72, both reaching their lowest levels since December. 

This decline reveals reduced demand expectations amid fears of a broader economic downturn, particularly in China, which remains the world’s largest oil importer.

The current market situation points to the fragility of the global economic outlook, with technology stocks like Nvidia bearing the brunt of investor apprehension.