Nvidia’s Earnings This Week Could Decide the Fate of the Entire Market

Nvidia is set to report its earnings on Wednesday, May 28, 2025, and it’s no exaggeration to say the entire stock market is watching. In a year where tech stocks have seen massive volatility, Nvidia’s numbers could either spark a renewed AI rally—or deflate the hype with a dose of reality.

The semiconductor giant, known for powering the artificial intelligence revolution with its high-performance GPUs, has been the backbone of the AI trade. Nvidia’s stock has risen more than 1,000% since late 2022, but so far in 2025, it’s down around 2% year-to-date. Investors are on edge, and this week’s earnings could determine not only the company’s next move but the market’s direction for the rest of the quarter.

Let’s break down what’s expected, what could go wrong, and why this earnings report is such a critical moment for both Nvidia and the broader tech sector.

The Expectations Are Sky-High

Wall Street expects Nvidia to post Q1 revenue of $43.2 billion, which would be a massive 45% year-over-year increase. Earnings per share (EPS) are projected to jump 66% to $0.88.

This growth is expected to be fueled largely by demand for Nvidia’s data center chips, especially the H100, H200, and the new Blackwell-based GPUs. These chips are the workhorses behind the world’s largest AI models—used by OpenAI, Microsoft, Google, Amazon, and others.

Nvidia has been selling chips as fast as it can make them, and many analysts believe this earnings report could confirm that the AI boom is still in full swing. If Nvidia beats these lofty expectations and guides higher, it could add hundreds of billions of dollars in market cap overnight, pushing the S&P 500 and Nasdaq even higher.

But that’s a big “if.”

The Whole Market Is Tied to Nvidia Right Now

This isn’t just about one company. Nvidia is the last of the “Magnificent Seven” to report earnings this season, and the rest of the group has delivered mixed results. Meta disappointed. Apple underwhelmed. Microsoft was strong. But investors haven’t seen a unified signal from big tech.

That leaves Nvidia to be the tie-breaker.

Why? Because Nvidia is more than just a chipmaker—it’s the engine behind the entire AI narrative. If Nvidia shows continued explosive growth, it validates the massive capital flowing into AI infrastructure and software. If Nvidia stumbles, it could signal that the AI boom is already slowing—or worse, overhyped.

That’s why hedge funds, retail investors, and even policymakers are paying attention.

A $50 Billion China Problem

One of the biggest risks to Nvidia’s growth story is geopolitical.

Due to U.S. export restrictions, Nvidia can no longer sell its most advanced chips to China—a market that once accounted for 20–25% of its data center revenue. The U.S. government has banned Nvidia’s high-end chips like the H100 and H200 from being sold in China, citing national security concerns.

As a result, Nvidia’s market share in China has dropped from 95% to around 50%, and Chinese rivals like Huawei are gaining fast.

CEO Jensen Huang has publicly criticized these export bans, saying they’re “a failed strategy” that only pushes China to develop its own alternatives. Still, Nvidia has no choice but to comply—and that could leave billions in lost sales on the table.

To counter this, Nvidia is reportedly preparing to launch a China-compliant AI chip based on its new Blackwell architecture. This new chip—rumored to be called the RTX Pro 6000D or B40—will be stripped of high-end features to meet export rules. It will be cheaper (around $6,500–$8,000 vs. $10,000–$12,000 for the H20) and use simpler memory and packaging.

Mass production could begin as soon as June, but it’s still unclear whether Chinese companies will bite—or if they’ll keep shifting to Huawei’s Ascend chips.

Supply Chain and Capacity Questions

Another issue investors are watching is whether Nvidia can meet demand.

The company’s chips are still in extremely high demand, but production bottlenecks remain a concern. Nvidia relies heavily on TSMC (Taiwan Semiconductor Manufacturing Company) for advanced chip production. Any hiccup at TSMC—be it geopolitical, natural disasters, or production issues—could disrupt Nvidia’s ability to deliver.

To scale up, Nvidia is working closely with TSMC to secure more advanced packaging capacity for its CoWoS (Chip-on-Wafer-on-Substrate) technology, critical for AI chips. But competition for these resources is fierce, with Apple and AMD also in line.

This capacity constraint could become a bigger issue in the second half of 2025 if demand continues to rise, especially as more companies race to build their own AI infrastructure.

Valuation: Priced for Perfection?

Perhaps the biggest challenge for Nvidia isn’t supply or geopolitics—it’s expectations.

Nvidia is now worth over $2 trillion, and it trades at more than 30x forward earnings—a steep multiple even by tech standards. For comparison, Apple trades around 26x, and Microsoft around 34x.

That means Nvidia needs to not only beat expectations but deliver a strong forward outlook to justify its premium. Any hint of slowing demand, pricing pressure, or increased competition from AMD or Intel could spook investors and lead to a sharp sell-off.

The market has little patience for “great, but not great enough” when it comes to growth darlings like Nvidia.

What Investors Should Watch on Earnings Day

Here are the key things to look for in Nvidia’s earnings report:

1. Revenue and EPS Beat – Does Nvidia outperform the $43.2B revenue and $0.88 EPS estimate?

2. Data Center Growth – This is the engine of Nvidia’s business now. Any slowdown would be a red flag.

3. Blackwell Adoption – Are customers beginning to shift toward the new Blackwell chips? How fast is uptake?

4. Margins – Gross margins have been above 75%. Can Nvidia maintain this as it shifts to lower-priced China chips?

5. Forward Guidance – This might be the biggest factor. Is demand still growing in Q2 and Q3, or is it leveling off?

6. China Strategy – What’s the update on alternative chips for China? Are orders flowing, or are they facing resistance?

7. Capex and Supply Chain – Any updates on capacity expansion or TSMC collaborations will matter a lot for future growth.

Nvidia’s Q1 earnings are more than just a tech company reporting numbers—they’re a referendum on the entire AI boom and, by extension, the future of the stock market in 2025.

If Nvidia crushes expectations and delivers a strong outlook, expect a wave of optimism to lift not just tech stocks but the entire market. But if the company shows any weakness—especially in guidance or data center growth—the downside could be brutal, with ripple effects across the AI ecosystem.

For investors, this is a moment to pay close attention. Nvidia has defied gravity for two years. Now it has to prove it can do it again.

Watch the numbers. Watch the margins. Watch the guidance.

Because this week, Nvidia isn’t just reporting earnings—it’s reporting on the state of the entire tech rally.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.