NVIDIA's Results Are Already Good Enough... The Market Is Watching Only Jensen Huang's Words

[Financial News] As NVIDIA Corporation is set to release its second-quarter results for the May-July period on the 26th local time, the market is focusing more on CEO Jensen Huang's remarks than on the earnings themselves. Since results that beat market expectations are now widely seen as a foregone conclusion, the company's response to questions about the next-generation Rubin chip, sales in China, memory supply shortages, and circular financing concerns is expected to determine the stock's direction.
According to prediction market Polymarket, as of the 25th, there is a 96% chance that NVIDIA Corporation's adjusted earnings per share will exceed market forecasts, and a 95% chance that data center revenue will top $80 billion. By contrast, the probability that the stock will close above $220 after the earnings release stands at just 43%.
That suggests it has become difficult to lift the stock simply by saying the company performed well. NVIDIA Corporation's shares have fallen on six of the past eight earnings announcement days, and they have declined in each of the last four quarters. Its stock is also up only 11.8% this year, far below the 61% gain in the Philadelphia Semiconductor Index (SOX) over the same period.
The earnings outlook remains dazzling. Financial data provider SEG estimated second-quarter revenue at $92.2 billion, nearly double the figure from a year earlier. Revenue for the third quarter is also projected to rise 82.8% year on year to $104.2 billion.
The key issue is whether that growth can last. JPMorgan Chase cited the rise of competitors specializing in inference, such as Application-Specific Integrated Circuit (ASIC) makers, shipments of H800 chips to China, and changes in next-generation chip specifications driven by memory shortages as major variables. Some Chinese customers are reportedly already receiving H800 chips, which could help lift fourth-quarter results through a recovery in China sales.
The next-generation Rubin GPU architecture is also under scrutiny. Morgan Stanley expects Rubin to generate $9 billion in revenue in the third quarter alone. As the center of the AI market shifts from training to inference, attention is focused on whether NVIDIA Corporation can fend off challengers such as ASIC makers, Intel, and AMD and maintain its dominance.
The company cannot avoid scrutiny over recent circular financing concerns either. NVIDIA Corporation has agreed to guarantee up to $105 billion for OpenAI's 20-year lease contract for a data center in Ohio, and it has also unveiled a $500 billion AI infrastructure financing plan with major financial institutions. As the chipmaker backs not only customers' AI investments but also the funding needed for those projects, some in the market are saying NVIDIA Corporation is becoming the 'central bank of the AI industry.'
If soaring memory prices force NVIDIA Corporation to lower its gross margin outlook from the current level of around 75%, that could signal stronger pricing power for memory makers such as Samsung Electronics and SK hynix. On the other hand, if the company maintains its margin, it would mean it has passed higher costs on to customers, bringing the spending capacity of big tech firms for AI investment into focus as the next variable.

[email protected] Kim Kyung-min Reporter