Nvidia Earnings Approach: Can It Drive a Nasdaq Rebound? What Should Investors Watch Most?

TradingKey - On May 20, ET, NVIDIA ( NVDA )'s first-quarter fiscal 2026 earnings report, to be released after the market close, has become the market focus. The options market has already reacted; based on options positioning data, the market expects NVIDIA's stock price to potentially swing by approximately 6.5% the day after the earnings release.

For the market, this earnings report has transcended the scope of a single company's financial performance, becoming a core verification metric for the entire AI capital expenditure cycle. According to LSEG, NVIDIA's revenue for the April quarter is expected to grow by 79%, marking its fastest growth in over a year, while adjusted profit could rise by 81.8% to reach $42.97 billion.

Analysis suggests that NVIDIA's first-quarter growth is primarily driven by major customers like Microsoft ( MSFT ), Meta and others continuing to ramp up AI infrastructure spending, with total AI investment by Big Tech expected to exceed $700 billion this year. As long as this report continues to prove that AI spending is not cooling down, the Nasdaq and chip stocks have reason to sustain their strength.

Intel ( INTC )'s market performance following its better-than-expected earnings report serves as a classic case. On April 23, after Intel released a stronger-than-expected second-quarter revenue outlook, its shares surged 19% after hours, while Nasdaq futures rose 0.3% at the time. The following day, the Philadelphia Semiconductor Index climbed 4.32%, AMD and Arm also rallied. NVIDIA similarly gained 4.32% that day. This illustrates that when a heavyweight chip company provides strong guidance, the market not only reprices the stock itself but also spreads optimism regarding AI infrastructure demand across the entire tech sector.

From an investor's perspective, there are five key areas to watch in NVIDIA's upcoming earnings report. First, whether cash returns can be improved—NVIDIA used only about 47% of its free cash flow for dividends and buybacks from fiscal 2022 to 2025, lower than the approximately 80% return level of major tech stocks; second, whether the Vera Rubin architecture can successfully enter mass production in the second half of 2026; third, whether gross margin can hold at around 75% despite rising memory and component costs; fourth, any adjustments to the company's $1 trillion revenue target forecast for 2025 to 2027; fifth, the extent of competitive pressure from Google TPUs, agentic CPUs, and other custom chips.

Beyond these five points, NVIDIA faces two more practical issues. The first is the pace of data center construction. Reuters cited analysts saying that while customer demand for GPUs is robust, slower-than-expected data center build-outs could limit short-term demand. The second is uncertainty in the Chinese market. Although Jensen Huang's recent visit to China with U.S. President Trump raised market expectations, the Chinese government's push for local alternatives remains a variable, and NVIDIA's H200 chip is still not sold in China.

Overall, if NVIDIA's earnings show revenue, gross margin, and guidance all exceeding market expectations, while the Vera Rubin architecture successfully reaches mass production and the $1 trillion revenue goal is not revised downward, NVIDIA could drive the semiconductor sector and even the Nasdaq Index higher, similar to Intel's impact. Conversely, if earnings underperform and guidance is lowered, it is highly likely to trigger profit-taking, weighing on overall tech stock performance and leading the Nasdaq Index into a deeper correction phase.

Nasdaq Index daily chart, Source: TradingView