Nvidia earnings 'absolutely key to the AI infrastructure trade'

Nvidia stock ( NVDA ) is back. But it’s about to be put to the test again.

The next big event for the market is the chip darling’s earnings report, set for after the bell Wednesday.

And it’s not just Nvidia stock that’s on the line: Nvidia’s results will set the pace for other AI players.

“Nvidia’s report and guidance will be absolutely key to the AI infrastructure trade,” tech investor Paul Meeks told Yahoo Finance.

The past several weeks have been a roller-coaster ride for tech investors. Shares of AI giants Amazon ( AMZN ), Microsoft ( MSFT ) and Alphabet ( GOOGL ) are down over the past three months, with Alphabet falling more than 6% and both Amazon and Microsoft down more than 3%.

And second-tier AI players are struggling to regain traction as well. AMD ( AMD ) has fallen more than 16% since mid-July while Marvell Technology ( MRVL ) is off nearly 6% in the same period.

But strong results from Nvidia could reignite some of that lost momentum, according to Wedbush’s Dan Ives.

“Nvidia is the heart and lungs of this bullish tech trade as the AI Revolution takes hold,” Ives told Yahoo Finance.

Ives, who expects a “shock and awe” quarter from Nvidia, says continued strong demand for the company’s chips will have ripple effects across the industry. In a recent note to clients, Ives estimated that for every dollar spent on a Nvidia GPU chip, there is an $8 to $10 multiplier across the tech sector.

Bernstein’s Mark Shmulik, who covers many of Nvidia's biggest customers including Meta, Amazon, and Google, told me the chip giant’s results will be a critical driver of Big Tech’s next move.

“Nvidia is a bellwether of the Magnificent Seven and AI trade,” Shmulik explained. “If there is any softness, maybe rotation out of the Mag 7 picks up a little bit of steam, but listening to other tech earnings, core fundamentals keep delivering.”

So far this year, Nvidia’s stock has soared. Shares are up 180% over the past year and up nearly 2,900% over the past five years — setting the bar very high for earnings this quarter.

Estimates are for Nvidia's revenue to grow 112% in its latest quarter, marking a dramatic slowdown from over 250% growth one year ago. For Wall Street, consensus remains bullish . KeyBanc, Citi, and Goldman Sachs were among those on the street who reiterated their Buy ratings on the stock this week ahead of results.

While only time will tell whether Nvidia lives up to the hype this earnings season, it’s safe to say the stakes are high.

Seana Smith is an anchor at Yahoo Finance. Follow Smith on Twitter @SeanaNSmith . Tips on deals, mergers, activist situations, or anything else? Email [email protected].