Wall Street will be able to see where the billions being spent on artificial intelligence are going when Nvidia reports its earnings after the market closes on Wednesday. How the declining market reacts to that is another matter.
Scott Martin, investment director at Kingsview Wealth Management, which owns shares in Nvidia and several other major technology companies, said: “This is the kind of report that says: what happens to Nvidia happens to the market.”
Nvidia's Q3 forecast
Analysts expect the chip manufacturing giant to achieve growth of more than 50% in both net income and revenue during the third fiscal quarter.
The reason is fairly clear and simple. Microsoft, Amazon, and Alphabet—which together account for more than 40% of Nvidia's sales—are expected to increase their spending on artificial intelligence by 34% over the next twelve months, bringing the total to $440 billion, according to data compiled by Bloomberg.
The danger is that these figures will lose credibility if major AI companies, especially the privately owned OpenAI, are forced to renege on their commitments.
A dangerous game with artificial intelligence companies
Michael O'Rourke, chief market strategist at Jonstrading, said: The big AI companies have been constantly raising the bar, and now they not only have to meet the numbers, but they also have to continue to meet rising market expectations.
He concluded: It's a risky game for public companies to play. Companies have always adhered to their goals, and Nvidia is expected to benefit.
