The earnings reports that will determine the fate of global markets will be released tomorrow morning.

Author: Dong Jing Source: Wall Street News

Global markets are gripped by a dangerous collective anxiety, and perhaps only Nvidia can break this deadlock. This $4.5 trillion chip giant will release its third-quarter earnings report after the US stock market closes on Wednesday (early Thursday morning Beijing time), a report that will determine the direction of global markets in the final weeks of the year.

Currently, market tension is spreading: from Bitcoin to tech stocks, from gold to government bonds, from the private market to corporate bonds, almost all asset classes are facing selling pressure. Against this backdrop, investors are focusing their attention on Nvidia, a move driven by both hope and desperation. The company's performance will directly reflect the real returns on the tech giants' hundreds of billions of dollars invested in AI.

Currently, Wall Street analysts are generally optimistic about Nvidia's upcoming earnings report, predicting that both net profit and revenue will increase by more than 50%.

Analysts point out that if investors are satisfied with Nvidia's Q3 results and Q4 guidance, bulls will drive the market to an optimistic close; otherwise, the market may face a deeper correction. As Wall Street insiders have said, "This is a report where Nvidia's trajectory determines the market's trajectory." It's worth noting that in a market with high concentration risk, Nvidia, as the largest weighted stock in the S&P 500 and the center of AI trading, has never been more important in terms of performance. However, some market participants point out that concentration risk is exciting when the market is rising, but can become a nightmare when it's falling. Nvidia: The Only Savior of the Current Market? A more somber mood is spreading in the market, and only Nvidia can break this gloom. The most speculative sectors in the financial markets are currently under pressure. Bitcoin—perhaps the purest measure of speculative fervor—has fallen 29% from its peak, turning negative for the year. Companies holding and storing Bitcoin are in dire straits. Strategy (formerly MicroStrategy), the largest of these, has seen its stock price fall more than 30% this year and more than 50% from its summer high. The stock prices of unprofitable U.S. tech companies have been sluggish for weeks, indicating that investors, even risk-taking retail investors, are losing patience with the hype. More worryingly, the turmoil isn't limited to the more aggressive sectors of tech stocks. Meta, Facebook's parent company, has seen its stock price flat this year and has wiped out a quarter of its market capitalization since August, as investors become uneasy about its seemingly endless spending on artificial intelligence. While pressures in the private equity market aren't always readily apparent, a series of defaults in recent months have already rattled the market. An index compiled by Absolute Strategy Research, tracking companies like Blackstone and KKR, has fallen 13% this year, a stark contrast to the S&P 500. Analysts point out that the sharp rise in benchmark U.S. stock indices has clearly masked numerous problems. Beneath the surface, investors are becoming increasingly difficult to please. A significant risk is that this could escalate into a full-blown liquidation of the market, which has been buoyant since the spring. In this market environment, the importance of Nvidia's earnings report is becoming increasingly apparent. Despite recent sell-offs, Nvidia's stock price is still up 35% this year, more than double the Nasdaq 100's roughly 17% gain. Meanwhile, the stock price decline makes the company's valuation relatively attractive. Nvidia's current forward price-to-earnings ratio is approximately 29, well below its 10-year average of 35 and slightly above the Nasdaq 100's approximately 26. "Given Nvidia's growth rate, a P/E ratio of 30 doesn't seem unreasonable at all," said Scott Martin, chief investment officer at Kingsview Wealth Management. Wall Street analysts expect Nvidia's third-quarter net profit and revenue to both grow by more than 50% in the upcoming earnings report. Data compiled by Bloomberg shows that Microsoft, Amazon, Google, and Meta together account for more than 40% of Nvidia's sales, and their AI spending is expected to grow by 34% to $440 billion over the next 12 months. Therefore, the company's performance will directly reflect the real return on hundreds of billions of dollars in AI investments. Analysts point out that if investors are satisfied with Nvidia's third-quarter results, bulls will drive the market to an optimistic close; if not, the market may face a deeper correction. As Martin stated: "This is an earnings report where Nvidia's performance determines the market's direction. If Nvidia's performance is strong, with expected sales and activity exceeding expectations, then everything will improve." Wall Street is betting on another "beat-and-raise" earnings report. Wall Street investment banks are generally optimistic about Nvidia's earnings. According to Hard AI, JPMorgan Chase pointed out in its latest research report that Nvidia is very likely to stage another "beat-and-raise" scenario. The bank expects third-quarter revenue to exceed the market consensus of approximately $55 billion and gave a guidance of $63 billion to $64 billion, significantly higher than the market expectation of $61.5 billion. JPMorgan Chase states that Nvidia's current growth rate is not driven by demand, but rather by the capacity limits of its massive supply chain. AI computing power demand continues to significantly exceed supply, and Nvidia's largest customer base, including hyperscale cloud service providers, emerging cloud computing companies, and AI labs, still faces computing power bottlenecks. Supply chain capacity is expanding rapidly. JPMorgan Chase expects Blackwell/Blackwell Ultra rack shipments to achieve approximately 50% quarter-over-quarter growth in Q3, reaching approximately 10,000 racks, and this growth momentum is expected to continue into Q4. The bank expects Nvidia's total rack shipments to reach 28,000 to 30,000 units throughout fiscal year 2026. More importantly, according to information disclosed by Nvidia at its GTC conference in October, its order backlog for calendar year 2026 already exceeds 70,000 racks, surpassing its maximum capacity for the entire year of next year. Based on this, JPMorgan Chase maintains its "overweight" rating on Nvidia with a target price of $215. JPMorgan Chase also stated in its research report that investors should closely monitor how management responds to four key concerns: First, the capacity ramp-up trajectory of Blackwell/Blackwell Ultra, especially the rate of capacity expansion into the first half of 2026 (i.e., the first half of Nvidia's fiscal year 2027). Secondly, there's the sustainability of AI spending. A recent report from JPMorgan's global team concluded that funding for AI will remain ample through 2030. Thirdly, there's the impact of power constraints. While approximately 120 gigawatts of data center power capacity is expected to come online globally over the next five years, the delivery cycle for new natural gas turbines has surged to 3-4 years, and the construction cycle for nuclear power plants exceeds 10 years, making power a real bottleneck. Finally, there's the impact of component cost inflation on gross margins. JPMorgan believes that rising LPDDR memory prices are a greater pressure point than HBM memory. Nevertheless, the bank believes Nvidia is still capable of achieving its mid-range gross margin target of 70% by the end of fiscal year 2026. According to TrendFocus, Morgan Stanley is even more optimistic, raising its target price for Nvidia to $220. Analyst Joseph Moore stated in a report on November 14th that industry research shows a substantial acceleration in demand, and Nvidia has fully resolved early rack-related issues, while demand continues to surge. Morgan Stanley's industry research shows that demand signals from Nvidia's customers and suppliers in the third quarter both point to accelerated growth, a stark contrast to the market's general expectation that Nvidia's growth indicators have peaked. At the customer level, third-quarter cloud service capital expenditure is expected to increase by $142 billion, with the four major hyperscale cloud service providers each increasing by more than $20 billion. Compared to 2025, the current dollar growth rate is $115 billion, 60% higher than a quarter ago. From a supplier perspective, ODM manufacturer Quanta expects its AI server revenue to accelerate in the first quarter of 2026, with year-over-year growth exceeding 100% in 2026. To support this demand, Quanta plans to double its AI server production capacity next year, as order visibility extends into 2027. Morgan Stanley raised its revenue forecast for Nvidia's October quarter from $54.4 billion to $55 billion, and its revenue forecast for the January quarter from $61.2 billion to $63.1 billion. Analysts point out that achieving $8 billion in sequential growth each in the October and January quarters would set a new industry record. However, deep-seated concerns in the market are difficult to dispel. Despite Wall Street investment banks generally being optimistic about Nvidia's earnings, market anxieties about AI investments are deepening, and these concerns are already reflected in investor behavior. According to a previous article by Wall Street Insights, Peter Thiel's hedge fund sold all of its Nvidia shares in the third quarter. SoftBank Group also exited its holdings to fund other AI investments. Scion Asset Management, owned by Michael Burry, the "big short" known for shorting the real estate market during the 2008 financial crisis, disclosed that it had purchased put options on Nvidia, with Burry warning of an AI bubble. Meanwhile, a Bloomberg analysis of 909 hedge fund 13F filings found that the number of funds increasing and decreasing their Nvidia positions was almost even in the three months ending September 30. Michael O'Rourke, chief market strategist at Jonestrading, stated: "These players in the AI ​​space have been relentlessly raising the bar for expectations, and now they not only have to deliver on their numbers, but they also have to continue meeting the market's rising expectations, which is a dangerous game for publicly traded companies." Moreover, a key risk currently facing the market is that these numbers could become unreliable if large AI spenders, particularly privately held companies like OpenAI, have to scale back their commitments. Melissa Otto, Head of Technology Research at Visible Alpha, noted, "I think what the market is really grappling with right now is the total potential market size of all these AI infrastructures." Jake Seltz, Portfolio Manager at Allspring Global Investments, stated that his firm holds a large position in Nvidia and he will be closely watching the next quarter's guidance. While revenue guidance may exceed market expectations, "it's hard to know how conservative they'll be in their guidance."