Nvidia (NSDQ: NVDA) Earnings: Can the AI Giant Keep Beating Wall Street?

Nvidia Q2 Preview: Can the AI Leader Keep Beating Expectations?

For the past two years, Nvidia (NSDQ: NVDA) has delivered quarter after quarter of revenue and earnings beats, yet analysts remain convinced there is still more to come. Ahead of the upcoming Q2 results, investment banks including Morgan Stanley, Cantor Fitzgerald, and Mizuho have all raised their targets, with some projecting revenue north of $46 billion and EPS above $1.00.

The reason is simple but powerful. For a decade, AI development was focused on building the science and architecture behind large models. Now the world is moving into the application phase, and that shift is driving an “insatiable” demand for the compute power only Nvidia can provide at scale.

In this analysis, we’ll explore how NVDA is positioned heading into earnings, what Wall Street is expecting, and the opportunities and risks retail investors should keep in mind as AI momentum shows no signs of slowing.

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Nvidia at 8% of the S&P 500

There is no question that Nvidia is an exceptional company, but its stock is currently priced at demanding levels. Shares trade at around 40 times earnings and 20 times revenue, leaving the valuation stretched and vulnerable to a potential pullback. Nvidia now makes up roughly 8 percent of the S&P 500, a level of concentration that history shows rarely endures as markets tend to revert toward the average over time.

For bullish investors, this creates a critical dilemma. With expectations for another quarterly beat already built into the share price, the risk is that strong results may not be enough to drive meaningful upside. Any additional gains could rely more on short-term trading momentum than on fundamentals. The question now is whether Nvidia can continue to defy gravity, or if the weight of lofty valuations and index concentration will eventually bring performance back in line with the broader market.

The Hidden Threat to Nvidia’s AI Dominance

Mega-cap technology companies such as Alphabet, Microsoft, and Amazon are no longer relying solely on Nvidia to power their AI ambitions. Each has been investing heavily in developing its own chips to reduce dependence on a single supplier. 

• Alphabet has its Tensor Processing Units (TPUs), which have been running in its data centers since 2015. 
• Microsoft has rolled out the Azure Maia AI Accelerator and the Azure Cobalt CPU to support its Azure platform. 
• Amazon, meanwhile, has developed Trainium for training large AI models and Inferentia for inference tasks.

It is true that competition in this space is not new and has not significantly eroded NVDA dominance to date. However, the risk for investors lies in the scale and capabilities of these tech giants. If any of them achieve major breakthroughs, they could meaningfully challenge NVDA position in the AI infrastructure market. While Nvidia remains the clear leader, the possibility of disruption from deep-pocketed rivals should not be dismissed.

The investor’s takeaway: Nvidia’s Growth Story vs. Investor Risk

At its core, investing is about making well-informed, risk-adjusted decisions to capture returns where the market has mispriced value. Nvidia is without doubt one of the world’s most impressive companies, and the optimism around its role in powering the AI revolution is understandable. The excitement is reminiscent of the early days of the dot-com boom, when a new era of technology was unfolding.

However, from a risk-adjusted perspective, buying Nvidia at current levels may carry more downside risk than upside reward. This does not mean the stock cannot climb higher, but with valuations stretched, investors need to consider whether the potential for excess returns is already priced in. If signs of slowing demand were to emerge, the risk of entering at or near the top becomes far more significant.