Nvidia earnings loom as risk factor for AI-obsessed stock market

This illustration photograph shows screens displaying the logo of US chipmaker Nvidia in Toulouse, southwestern France on February 18, 2026. Photo by Lionel BONAVENTURE / AFP via Getty Images

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While most Wall Street pros are anticipating strong results from the chipmaker amid ballooning spending on computing infrastructure, there is less certainty about how its shares — and others — will respond at a time when fears about AI disruption and the staying power of heavy investments are dominating the tape.

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“Even if they have tremendous numbers, we know the markets are really fickle,” said Ken Mahoney, president of Mahoney Asset Management.

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After powering the market higher for much of the past few years, Nvidia shares have gone cold in recent months, rising just 3.4 per cent since the start of the fourth quarter, as investors question the hundreds of billions of dollars customers like Alphabet Inc. and Microsoft Corp. are spending on AI. Meanwhile, investors have been fleeing sectors seen as potentially under threat from AI disruption.

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The selloff is weighing on the S&P 500 with shares of members like Intuit Inc., Gartner Inc. and Workday Inc. down more than 39 per cent since the start of the year. A Bloomberg index tracking the Magnificent Seven, which also includes Apple Inc., Amazon.com Inc., Meta Platforms Inc. and Tesla Inc., is down 5.5 per cent in 2026.

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Nvidia, however, is still the most valuable company in the world at US$4.7 trillion, giving it enormous sway over the market-cap weighted S&P 500. The index has fallen more than one per cent from a late January peak.

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Nvidia’s revenue is expected to jump 68 per cent to US$65.9 billion in its fiscal fourth quarter, which ended on Jan. 31. Adjusted earnings are anticipated to rise 72 per cent to US$1.53 a share, according to the average of analyst estimates compiled by Bloomberg.

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Another metric investors will be watching closely is gross margin, a measure of profitability that came under pressure last year due to high production costs for Nvidia’s Blackwell chips. The firm’s adjusted gross margin is anticipated to be 75 per cent in the fourth quarter, the highest in more than a year, and is projected to stay around that level in the current fiscal year.

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Investors want reassurances that such profitability can be sustained amid rising prices for memory chips and other input costs.

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“Margins are potentially a risk factor,” said Melissa Otto, head of technology, media and telecommunications research at Visible Alpha. “The question’s going to be around that gross margin coming into Q1 and then if they give any color for the rest of the year.”

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Otto is also looking for updates on the status of Nvidia’s Blackwell and upcoming Rubin chips. Nvidia chief executive Jensen Huang said in October that the two chip lines were on track to generate half a trillion dollars in revenue over the next several quarters, a milestone the company said it would reach faster than initially expected.