Nvidia earnings coming up: Will the AI superstar keep flying high, or is turbulence ahead?

Key points:

• Nvidia is expected to deliver strong revenue growth driven by AI chip demand, with high investor expectations for performance.
• Margins face short-term pressure from production ramp-up and export restrictions but are expected to recover.
• Geopolitical risks, particularly US-China tensions, pose significant challenges, though Nvidia is actively adapting to mitigate impacts.

Is Nvidia’s remarkable AI-driven rally about to hit a speed bump, or is the world’s AI powerhouse only just getting warmed up? All eyes will be on Nvidia when the tech giant reveals its earnings after markets close on Wednesday, May 28. Having soared to a breathtaking USD 3.3 trillion valuation, Nvidia now faces towering expectations. Any misstep, and the stock might quickly descend from its current lofty heights.

This year has been a rollercoaster for Nvidia shares: the stock is down roughly 2% year-to-date, but that modest decline masks a highly volatile journey. After tumbling on the news of DeepSeek's breakthrough in late January, the stock bounced back, only to face another downturn due to escalating tariff concerns. Most recently, it has surged dramatically—climbing over 40% since early April.

As the company that essentially powers the global AI gold rush, Nvidia’s quarterly reports are not merely about one firm—they’ve become a bellwether for the entire tech industry’s AI optimism. Here’s exactly what investors should watch for, why this earnings report truly matters, and what insights can help guide your next move.

Expect big numbers, sky-high expectations

Wall Street expects another staggering quarter from Nvidia, with revenues predicted to land around USD 43 billion, topping last quarter’s record-breaking USD 40 billion. This explosive growth primarily hinges on Nvidia’s dominant data centre segment, now responsible for around 90% of its total sales. In other words, the firm’s AI chips are no longer just a growth driver—they’ve become Nvidia’s entire growth engine.

Yet, as seasoned investors know well: when market expectations float near perfection, even a slight stumble can send shares tumbling. Nvidia needs more than just strong numbers—it must demonstrate it can sustain this extraordinary pace.

All eyes on Blackwell: Nvidia’s AI future takes centre stage

This quarter’s headliner is unquestionably Nvidia’s "Blackwell" GPU, the ultra-powerful next-generation chip purpose-built for AI workloads. Blackwell isn’t just faster—it’s Nvidia’s key to unlocking the next wave of AI breakthroughs.

But being at the cutting-edge has its price. Nvidia is expected to take a hit to its profitability this quarter due to ramping up production, sacrificing margins to get Blackwell out the door. Investors will closely scrutinise Nvidia’s guidance: Can margins swiftly rebound from the anticipated dip, returning towards a healthier mid-70% range later this year? If Nvidia signals confidence here, expect shares to respond positively.

Margins under pressure—but recovery in sight?

Despite Nvidia's impressive revenue growth, profitability will be closely scrutinised. Due to the recent US ban on its H20 chips for China, Nvidia anticipates a substantial USD 5.5 billion inventory write-off, significantly impacting gross margins. Analysts expect this charge to push margins down to around 58%, a steep drop from Nvidia’s earlier guidance of 71%.

Investors will be particularly attentive to management's comments on profitability. Nvidia must clearly communicate its timeline and strategic approach to restore margins back into the mid-70% range later this year, primarily driven by increased production efficiency and the ramp-up of its new Blackwell platform. Confidence from CEO Jensen Huang and his team regarding this margin recovery will be critical to maintaining investor confidence.

China: navigating stormy geopolitical waters

Geopolitics has cast a long shadow on Nvidia’s growth story. Recent US export restrictions could potentially erase USD 15 billion from the company’s future revenue streams, significantly denting Nvidia’s previously explosive growth prospects in China.

Interestingly, Nvidia is reportedly developing a new, cheaper Blackwell-architecture chip tailored specifically for the Chinese market, which could start production as soon as June. This new GPU will offer lower specifications and simpler manufacturing processes to comply with US regulations. Investors will be eager to learn from management whether this new strategy can successfully mitigate the severe impact of export restrictions on Nvidia’s China sales.

Nvidia has also aggressively pushed into new markets, recently securing massive AI infrastructure deals in Saudi Arabia and the UAE. Investors will want clear indications from management: can these new markets sufficiently offset lost sales in China, or is the firm still exposed to significant geopolitical risks?

Guidance will make or break this quarter

Forward-looking guidance will be critical. Analysts have already trimmed their expectations for Nvidia’s second quarter, warning the China ban could drop quarterly revenues significantly—from around USD 48 billion initially expected, down possibly as low as USD 41 billion.

CEO Jensen Huang’s commentary about continued robust demand from major clients such as Amazon, Microsoft, Google, and Meta will therefore be essential. Investors must watch carefully for any signals indicating whether these hyperscale giants are pulling back from their aggressive spending or if demand remains as insatiable as ever.

How fierce is the competition?

The AI landscape isn’t Nvidia’s alone. AMD is making strides with its own advanced AI chips, and major cloud players like Google and Amazon are building custom AI hardware to reduce their dependence on Nvidia. Investors should listen closely for management’s perspective on competitive threats—especially whether Nvidia sees any immediate erosion of its market leadership.

Reflections and insights for investors

At these valuation levels, investors aren't merely buying a tech stock—they're betting Nvidia will remain the beating heart of the AI revolution for years ahead. Yet, with shares priced to perfection, the margin for error is razor-thin.

Nvidia's achievements in AI have been truly remarkable, but investors should brace for inevitable short-term volatility. The journey forward won't be without its challenges, though the long-term outlook remains highly promising.

Actionable takeaways

• Expect volatility: Given sky-high expectations, even small disappointments in revenue growth or margin recovery could spark sharp stock swings.
• Listen carefully for management’s margin recovery roadmap: Clear confidence here is crucial to sustaining current valuation levels.
• Keep an eye on China: Understand clearly how Nvidia intends to manage significant geopolitical revenue disruptions.
• Monitor competitive threats: Nvidia remains dominant, but never underestimate rivals—listen for clues on AMD and custom chips from cloud giants.
• Look beyond short-term turbulence: Long-term investors might consider pullbacks as potential buying opportunities, provided Nvidia maintains clear AI leadership and healthy demand signals.

Nvidia’s pivotal earnings ahead

As Nvidia prepares to reveal its latest numbers, investors are standing on the edge of their seats. The company has thrived spectacularly, propelled by an unprecedented AI boom—but at current valuations, there's no room for error.

This earnings report will show us clearly if Nvidia can keep its astonishing pace or if it faces an imminent reality check. Either way, buckle up: Nvidia's results won’t just shape its own future—they’ll send a clear signal to investors about the entire AI sector’s trajectory from here.