Nvidia earnings run into a market afraid of AI spending

Wall Street will get a sense of where the billions of dollars being spent on artificial intelligence are going when Nvidia Corp. reports its earnings after the bell on Wednesday. How the sinking stock market will react is another question.

- RYAN VLASTELICA & CARMEN REINICKE

“This is a ‘so goes Nvidia, so goes the market’ kind of report,” said Scott Martin, chief investment officer at Kingsview Wealth Management, which owns shares of Nvidia and several of its Big Tech peers.

Analysts expect the chip behemoth to show more than 50 per cent growth in both net income and revenue in its fiscal third quarter. The reason is fairly straightforward. Microsoft Corp., Amazon.com Inc, Alphabet Inc and Meta Platforms Inc — which taken together represent more than 40 per cent of Nvidia’s sales — are projected to increase their combined AL spending by 34 per cent over the next 12 months to $440 billion, according to data compiled by Bloomberg.

The risk is that these numbers could become unreliable if the big AI spenders, in particular closely held OpenAl, have to pull back on their commitments.