Nvidia will report second-quarter earnings on Wednesday in a major test for the AI ​​trade

AI juggernaut Nvidia ( NVDA ) will report its second-quarter earnings after the bell on Wednesday. Nvidia’s announcement — its most anticipated results of the quarter — will send ripple effects across the tech sector as investors look for signs that artificial intelligence trading will continue to dominate market conversations in the second half of the year.

Shares of Nvidia are up more than 163% year-to-date and 60% over the past six months. Rival AMD’s ( AMD ) share price is up 9% year-to-date and has fallen about 14% over the past six months.

Shares of Intel ( INTC ) have tumbled 57% since the start of the year and are down 53% over the past six months as the company continues to struggle amid its massive turnaround effort.

For the quarter, Nvidia is expected to report adjusted earnings per share (EPS) of $0.65 on revenue of $28.7 billion. That’s a 139% increase in EPS and a 113% increase in revenue compared to the same period a year ago, when Nvidia posted EPS of $0.27 and revenue of $13.5 billion.

Nvidia is the world leader in AI chip design and software, controlling between 80 percent and 95 percent of the market, according to Reuters. And it’s expected to continue to hold that lead as it begins rolling out the next generation of Blackwell’s chip lineup.

And while The Information reported on a potential delay in Blackwell shipments, analysts at firms such as Goldman Sachs, KeyBanc and Loop Capital don’t see it as worrying for Nvidia in the short term.

“Our work suggests that while Blackwell is actually late, as we first wrote about (August 8), it could be more like 120 days versus 90 days… although it may not matter much, because (1)) TSMC’s Hopper production continues to improve, and (2)) Hopper’s ramped-up production through the fall may exceed Blackwell’s foregone release,” Loop Capital managing director Ananda Baruah said in a note for investors.

For the quarter, Nvidia’s all-important data center business is expected to bring in $24 billion in revenue, up 142% from the segment’s $10.3 billion in the same quarter last year . Wall Street expects Nvidia to not only beat Q2 expectations, but also raise its Q3 guidance, which could be supported by TSMC’s recent earnings decline. TSMC makes chips for Nvidia.

This increase in data center growth is, however, less than the 426% increase in revenue last quarter and 408% in Q4 last year.

That growth is expected to slow further in Q3, when the company is expected to report data center revenue of $27.7 billion, up 91% year over year.

“We think Nvidia will do close to $30 billion in data center revenue in October. And so, you know… the law of large numbers (is) here,” Stifel CEO Ruben Roy told Yahoo Finance on Monday. “But we believe, again, that the company’s profitability will continue to grow.”

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Nvidia’s rivals are not resting on their laurels either. Last week, AMD announced it was acquiring ZT Systems in a deal valued at $4.9 billion. The move gives AMD more firepower to build AI system servers, something that has been a major catalyst for Nvidia’s own sales.

And while it might give AMD a sales boost, that doesn’t mean Nvidia will face any major threats to its reign as AI king anytime soon.

“There are emerging competitors like AMD that are starting to take a little market share,” Roy said. “But when you look at the overall cycle of infrastructure spending … which we think is going to continue to grow, Nvidia seems to us to be best positioned to benefit from (spending).”

Beyond its AI revenue, Nvidia is also expected to report gaming revenue of $2.7 billion. Once Nvidia’s main source of revenue, gaming has become a much smaller part of the Nvidia story. However, the segment is much larger than Nvidia’s other businesses, including professional viewing and automotive.

email Daniel Howley at [email protected]. Follow him on Twitter at @DanielHowley.

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