Nvidia is worth $5.2 trillion and its shares are up 21% in 2026, which sounds healthy until you notice the wider chip gauge, the PHLX Semiconductor index, is up 63%. The single most important name in the AI trade has spent this year being lapped by its own sector.
That is the setup for Wednesday, 26 August, when Nvidia reports fiscal second-quarter results after the closing bell. Analysts want revenue near $92 billion, up about 97% on the same quarter a year ago, and earnings around $2.08 a share. Bank of America reckons the four largest US cloud providers finished June sitting on a combined $2.3 trillion of order backlog they cannot deliver without an enormous quantity of Nvidia chips.
The backlog is the bull case
BofA analyst Vivek Arya’s argument is simple. Microsoft, Amazon, Alphabet and Oracle have promised customers more AI capacity than they can currently supply. Oracle can convert only about 12% of its backlog to revenue over the next year; Microsoft expects roughly 30%. To close that gap they have to keep buying, and Nvidia still holds an estimated 80% to 90% of the AI accelerator market. The company has spoken of a $1 trillion order book across 2026 and 2027, against $253 billion of revenue over the past twelve months.
Nvidia has also started selling its Vera server processors as standalone chips rather than only inside full racks, opening a market it thinks is worth $20 billion this year. Its gross margin guidance of 75%, up from 72.7% a year ago, hints the bottom line could beat the number Wall Street has pencilled in.
Why the stock has lagged
If the numbers are this good, why has Nvidia trailed the pack? Part of it is expectations, because after two years of near-vertical growth, doubling revenue again is priced in and then some. Part of it is nerves about the durability of AI spending, the recurring worry that hyperscaler capex is a bubble waiting to deflate. And part of it is rotation, with money chasing Broadcom and other names earlier in the year.
The valuation is less demanding than the headlines suggest. Nvidia trades on about 25 times forward earnings, a shade under the Nasdaq-100’s 26. For a company still compounding at these rates, that is not the dot-com madness the bears keep invoking.
The whole market is holding its breath
This is the closest thing markets have to a single-stock macro event. Every S&P 500 index fund now holds more Nvidia than Apple, so a big miss would ripple through pensions and retirement accounts that never chose to bet on AI chips. A beat likely lifts the whole tech complex; a soft outlook could trigger sector-wide profit-taking with the S&P sitting less than 2% from a record.
The timing is loaded. Nvidia reports on the Wednesday, then the Kansas City Fed’s Jackson Hole symposium runs 27 to 29 August, with new Chair Kevin Warsh giving his first keynote there on the Friday. Two of the biggest swing factors for the rest of the year land within seventy-two hours of each other. (Not investment advice.)
Did you know: Nvidia’s expected quarterly revenue of about $92 billion is larger than what rival Intel is on track to make in an entire year.
Sources
- Motley Fool: Nvidia earnings preview and the $2.3tn backlog
- Motley Fool: Alphabet and Amazon investing $420bn in AI
- CNBC: Nvidia Q1 earnings
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