Nvidia Stock Drops Ahead of Earnings. It Faces Wall Street's High Bar for Earnings

Nvidia shares dropped 1.2% in morning trading.

Investors get their latest look at Nvidia earnings Wednesday afternoon when the AI-chip leader reports its second-quarter results.

Wall Street analysts expect second-quarter adjusted earnings per share of $2.09, doubling over the past year, on sales of $92.3 billion, also twice what the company posted a year ago. Like Alphabet, which reported last month, Nvidia may see a big boost to earnings from unrealized gains in its stake in SpaceX, which went public during the second quarter.

But Nvidia has been an ongoing victim of high expectations. In each of the last eight quarters, the company has beaten the Wall Street consensus on key metrics; on six of those occasions, the stock has declined the following day.

Shares have underperformed the S&P 500 index in the past year, and they’re down 1% in the last three months. Until Tuesday, the stock had fallen in seven straight trading sessions. Its forward price/earnings ratio sits lower than that of the S&P 500 index, despite the company’s projected 89% EPS growth this year.