This article first appeared on GuruFocus.
Wall Street is staring at one of those hinge points where Nvidia (NASDAQ:NVDA) could once again set the tone for the entire AI universe. The company reports after the bell, just as its biggest customers Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG) and Meta (NASDAQ:META) prepare to lift combined AI spending by 34% to $440 billion over the next 12 months, representing more than 40% of Nvidia’s sales. Analysts expect the firm to post fiscal-third-quarter revenue and net-income growth above 50%, a pace powered by the same AI infrastructure boom that has pushed the stock to the center of the market’s narrative. Yet with Nvidia shares down more than 12% from their peak four weeks ago and investors increasingly uneasy about whether certain big spenders, including OpenAI, can maintain their commitments, the reaction could be more complicated than the numbers alone.
The broader setup feels like a market testing its own conviction. Even after the recent pullback, Nvidia is still up 35% this year, outpacing the Nasdaq 100’s almost 17% gain, and now trades at roughly 29 times forward earnings below its 10-year average of 35 and only slightly above the Nasdaq 100’s valuation near 26. Investors will be watching whether Nvidia’s data-center margins continue to expand and how strongly the Blackwell generation positions the company for its next step. Asset managers such as Allspring Global Investments anticipate a solid quarter but note that the real swing factor could be guidance, which they think might come in above Street expectations, although the tone could still be conservative. Growth expectations also shift further out: analysts forecast nearly 60% revenue growth in fiscal 2026, then 41% in fiscal 2027 and 22% in fiscal 2028 a deceleration that could influence how investors judge the durability of the AI wave.
Positioning around the stock is starting to look more divided. Peter Thiel’s fund exited entirely in the third quarter, SoftBank (SOBKY) sold its stake to finance other AI bets, and Michael Burry (Trades, Portfolio)’s Scion Asset Management disclosed Nvidia put options as part of a warning about froth tied to AI. Across 909 hedge-fund filings, the number of firms adding to and trimming their Nvidia positions was nearly even, raising the question of how much of the selling reflects simple profit-taking rather than a broader shift in sentiment. As some analysts suggest, Nvidia remains a standout performer, and there may be investors who feel it could be prudent to take a portion of gains while reassessing where the next phase of growth may come from. In that sense, Nvidia’s report may be less about what just happened and more about how confidently the company can speak about what comes next.