Nvidia's Growth Report: What Should Investors Expect?

Wall Street is focusing on an important milestone for Nvidia (NASDAQ:NVDA). When the company releases its financial third-quarter income report, its largest customers, including Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG), and Meta (NASDAQ:META), stated that they would increase their total AI expenditures by 34% to $440 billion over the next 12 months. This situation represents more than 40% of Nvidia's sales.

Analysts predict that the company's revenue and net profit will grow by over 50%. This progress is fueled by the ongoing AI infrastructure boom, placing the stock in the market's spotlight. However, Nvidia shares have fallen more than 12% from their peak in the last four weeks, and investors are increasingly concerned about whether large spenders like OpenAI can maintain their commitments. This situation could provoke a more complex reaction than the figures themselves.

The market finds itself in a situation testing its own beliefs. Despite the recent decline, Nvidia shares have risen by 35% this year. This increase surpasses the Nasdaq 100's roughly 17% gain. The company is trading at about 29 times its forward earnings; this ratio is below the 35 average of the last 10 years and only slightly above the Nasdaq 100's valuation.

Investors will be observing whether Nvidia can maintain its data center margins and how the Blackwell generation positions the company's next steps. Asset managers like Allspring Global Investments expect a solid quarter, but they suggest that the key determining factor may unexpectedly be the guidance, which is anticipated to trend upward. Analysts predict revenue growth of nearly 60% for the fiscal year 2026, 41% for 2027, and 22% for 2028, which could influence how investors assess the sustainability of the AI wave.

The representations surrounding the stock are becoming increasingly divided. Peter Thiel's fund completely exited in the third quarter, SoftBank (SOBKY) sold its shares to finance other AI bets, and Michael Burry's Scion Asset Management has highlighted concerns over excessive speculation related to AI by announcing Nvidia call options. Among 909 hedge fund filings, the number of firms increasing and decreasing their positions in Nvidia is nearly balanced, raising questions about how much of the selling is simply a profit-taking tactic.

Some analysts suggest that Nvidia still stands out with a strong performance and that it may make sense for some investors to take profits. In this context, Nvidia's report could be more significant not only for what it contains but also for how decisively the company can speak about what may come in the future.