Good morning! We’re covering what may end up being the wildest day of the quarter — Nvidia earnings, and what must go right and wrong for the AI giant. First time reading? Join 190,000 self-directed investors gaining an edge every morning. Sign up here. 

Nvidia comes due

Nvidia’s earnings don’t just move markets — they are the market. 

The latest results, due Wednesday after the closing bell, will represent more than a marginal company update. They’ll provide a litmus test of whether the artificial intelligence trade has room to run, and the results will likely determine the mood for the rest of the S&P 500.  

Nvidia has been investors’ favorite stock since ChatGPT debuted in November 2022, and its blistering shareholder returns have propelled the multi-trillion dollar AI boom. 

The stock has tumbled nearly 10% in the week leading up to its fourth-quarter report, though it remains up roughly 60% over the last 12 months. 

3 pressure points

Several months of new developments in trade, geopolitics, and AI breakthroughs create new risks for Nvidia. 

One obvious outcome is that earnings weakness drags the stock down. 

There is a chance, though, that negative news doesn’t move the stock as much as usual because its share price has traded flat for months, according to Steve Sosnick, chief strategist of Interactive Brokers.

He highlighted how the stock move after each of the last six earnings announcements: 

That tracks for an average of a 5.87% gain after earnings. 

For what it’s worth, Nvidia’s Tuesday closing price of $126.63 remains well below the majority of analysts’ price targets, as the chart from OpenBB illustrates.

To Bloomberg Intelligence analysts, Nvidia is likely to meet Wall Street’s expectations on revenue and raise its guidance for the year ahead as it appears on track for record revenue of $130 billion in 2025 and another 50% higher in 2026.

“Even after authorizing an additional $50 billion in share repurchases in August, voracious demand driven by a boom in generative AI could create a near best-in-class $350 billion of free cash flow over the next three years,” said Robert Schiffman, Bloomberg Intelligence’s senior credit analyst. 

Elsewhere:

📉 Stocks kept tumbling Tuesday. Tech stocks, crypto, and consumer confidence all dropped, with bitcoin touching $86,000 for the first time since before the November election. The Nasdaq will look to shake its four-day losing streak as Nvidia reports earnings after the bell Wednesday.

🏦 House lawmakers passed the GOP’s budget plan. Late Tuesday, Republicans squeaked their budget blueprint through the House after party leaders convinced the last handful of on-the-fence members to back President Trump’s agenda. The final vote was 217 to 215. (WSJ)

📈 Super Micro stock surged 22% after hours. The company reported its delayed financials for the latest fiscal year just in time to meet the Nasdaq’s listing deadline. The move reduces any near-term possibility that the stock could be de-listed from the exchange. (CNBC)

🇷🇺 Russia’s withering economy poses an obstacle to deals. The war-torn country has plenty of oil and mineral wealth, but years of conflict have weakened its viability as a partner despite President Trump’s desire to get a deal done. White House optimists point to a new era of cooperation starting with the end of the Ukraine war, but the lack of an investment case in Russia makes it tricky. (WSJ)

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About me:

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day, unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else. Feedback? Write me at phil@openingbellmedia.com, reply directly to this email, or ping me on X @philrosenn.