New York, Aug 28 (V7N) – The artificial intelligence (AI) surge that has fueled stock markets since the release of ChatGPT nearly three years ago is heading into a critical phase as semiconductor giant Nvidia Corporation prepares to report its second-quarter earnings on Wednesday. The results are expected to be a major litmus test for investor confidence in the AI-driven market rally.

Nvidia has become the face of the AI revolution, with its graphics processing units (GPUs) powering everything from generative AI models to data centers. In June 2025, Nvidia became the first company to surpass $4 trillion in market value, driven by the soaring demand for its AI chips. The stock has gained more than 30% so far this year, contributing nearly one-quarter of the S&P 500’s 10.4% year-to-date return, according to Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices.

AI Momentum Slowing?

Despite Nvidia’s meteoric rise, the broader technology sector — particularly AI-focused companies — has experienced growing volatility in recent weeks. Analysts attribute this to investor caution over whether the AI narrative can continue to justify sky-high valuations. Tech stocks, including major AI names, have stumbled this month, with investors closely watching for signs of slower growth or weaker demand.

According to Peter Berezin, Chief Global Strategist at BCA Research, “AI is a critical piece of what is driving stocks right now. If Nvidia shows any signs of slowing, the entire market could feel the ripple effects.”

The Broader AI Trade

A basket of 50 AI-related stocks tracked by Bespoke Investment Group has surged nearly 170% since the end of 2022, reflecting just how deeply AI has penetrated investor expectations. This group includes tech behemoths like Microsoft, Alphabet (Google's parent), AMD, and Palantir — many of which have made substantial investments in AI infrastructure, cloud computing, and machine learning applications.

Palantir Technologies’ shares have doubled in value this year, while other semiconductor players like Advanced Micro Devices (AMD) and Broadcom (AVGO) have outperformed the broader market.

AI's influence is not limited to the tech sector. Companies in utilities and energy infrastructure have seen rising investor interest due to the increased energy demands of AI data centers and computing networks. This expansion of the AI narrative beyond pure tech reflects the market’s belief in AI as a transformational force across industries.

Big Bets from Big Tech

Earlier in the earnings season, Microsoft and Alphabet reported strong results, citing continued demand for AI products and announcing large-scale capital expenditures in AI infrastructure, including data centers and chip development.

However, these companies also signaled that returns on AI investments may take time to fully materialize, adding another layer of uncertainty ahead of Nvidia’s report.

What’s at Stake?

For investors, Nvidia’s Q2 earnings will be a make-or-break moment. Expectations are sky-high, with analysts forecasting record revenues driven by AI chip sales. Any sign of slowing growth, soft guidance, or margin pressure could trigger a broader sell-off in tech and AI-exposed sectors.

On the other hand, if Nvidia exceeds expectations and raises its outlook, it could reignite the AI rally and reaffirm the company’s role as the primary engine of the current market cycle.

With Nvidia at the center of the AI ecosystem and the stock market’s gains increasingly tied to its performance, all eyes will be on Wednesday’s earnings call — a moment that could define the trajectory of global equity markets in the months to come.

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