Nvidia Earnings: Can It Deliver Enough Upside in a Challenging Market?

Nvidia is set to report its fiscal second-quarter 2027 results on August 26, and investors are already expecting another strong quarter. However, it's not just about beating forecasts, but also delivering enough upside to justify high expectations.

The company's revenue is expected to reach around $92.2 billion, a 97% increase year-over-year, with adjusted earnings per share (EPS) of approximately $2.09, more than double the previous year's figure. Gross margins are anticipated to remain around 75%. But what investors really want to know is whether Nvidia can pass on increased costs and maintain its pricing power.

The company faces challenges in several areas, including supply chain management. With prices of AI servers using Nvidia chips set to rise by over 15%, due to higher memory and component costs, Nvidia needs to prove it can protect its margins. Investors should also keep an eye on the chipmaker's ability to ship enough high-end GPUs and sustain AI spending without relying increasingly aggressive financing structures.

Nvidia is expanding its role beyond just selling chips, aiming to capture more of the AI stack by offering a comprehensive ecosystem that includes networking, systems, and software. However, with bond yields near 5%, investors may not be as willing to pay a premium for growth stocks, making it even more crucial for Nvidia to deliver strong results.