The worldwide tech trade is paying eager consideration to Nvidia’s upcoming earnings report, as it’s anticipated to be the bellwether for Samsung Electronics, SK hynix and different home semiconductor corporations’ methods for increasing their capability.
Trade officers say the announcement can be essential to verifying whether or not the present funding frenzy over synthetic intelligence (AI) is overhyped. Relying on the announcement, the present money stream between Nvidia and hyperscale information middle operators could possibly be affected, doubtlessly main chipmakers to evaluate the tempo of their fab growth plans.
U.S.-based Nvidia is about to announce its 2026 third quarter earnings on Wednesday (native time) after the shut of markets. Analysts are anticipating $55.2 billion in income, up 57 % year-on-year, with an adjusted earnings per share of $1.26, up 55 % from a 12 months earlier.
The expansion fee is taken into account a key indicator of the real world market demand for AI. In latest months, Nvidia has confronted questions over whether or not expectations have outpaced precise demand and whether or not the rising scale of AI funding is translating into actual revenue.
If the corporate continues to indicate sharp progress in its earnings, confidence for AI will stay excessive. But when the tempo slows, it may reinforce issues that the market has been overly optimistic. Nvidia has posted income progress for six consecutive quarters, however its progress fee has step by step slowed.
“Expectations are steep, and the response will rely upon whether or not the corporate proves the AI growth remains to be delivering increasing profitability quite than simply increasing scale,” mentioned Nigel Inexperienced, CEO of economic advisory group deVere Group.
Inexperienced added that buyers are paying shut consideration to particulars akin to information middle contribution and the stream of orders from hyperscalers. A small miss in any of these areas “may change sentiment immediately, particularly after one of many strongest multiyear share worth performances in fashionable market historical past.… When expectations tower over actuality, even a powerful quarter can fall in need of what the market has imagined.”
Some doubt has already materialized. Thiel Macro, a hedge fund led by PayPal and Palantir Applied sciences co-founder Peter Thiel, offloaded its total stake in Nvidia on Monday, following SoftBank’s earlier unloading of its Nvidia inventory, sounding alarms over a doable AI bubble.
If earnings progress falls in need of expectations, it could counsel that precise demand for Nvidia’s AI accelerators isn’t matching market forecasts, which might have an effect on the growth plans of Samsung Electronics and SK hynix concerning high-bandwidth reminiscence (HBM), a complicated reminiscence chip utilized in Nvidia’s AI accelerators.
Samsung Electronics’ semiconductor campus in Pyeongtaek, Gyeonggi Province / Courtesy of Samsung Electronics
Samsung Electronics and SK hynix are each scaling up their HBM capability. Samsung mentioned Sunday it determined to renew building on its P5 line at its semiconductor campus in Pyeongtaek, Gyeonggi Province, with the purpose of starting operations in 2028. SK hynix is expediting the operation of its new M15X fab in Cheongju, North Chungcheong Province, in addition to constructing a megasize chip cluster in Yongin, Gyeonggi Province, which is predicted to finish its first fab in 2027.
These funding selections are based mostly on the present AI demand, however the brand new fabs gained’t be totally operational till two to a few years later. If questions come up about future demand for Nvidia’s accelerators, methods for these new fabs could possibly be reconsidered.
Traders are additionally awaiting extra insights from Nvidia CEO Jensen Huang concerning the gross sales outlook for Nvidia merchandise based mostly on its next-generation structure, Rubin.
Nvidia mentioned in August that it had taped out its Rubin graphics processing items (GPUs) and despatched them to TSMC for manufacturing. Mass manufacturing is predicted to start across the third quarter of subsequent 12 months, which means the schedule will coincide with the full-fledged operation of Samsung Electronics and SK hynix’s new fabs. This implies the brand new fabs’ utilization fee could possibly be swayed by the supply of Rubin-based GPUs.
Regardless of lingering doubts, home analysts count on the present semiconductor upcycle to take care of its momentum. “Nothing has modified within the reminiscence market,” mentioned Samsung Securities analyst Lee Jong-wook. “The sturdy information middle demand subsequent 12 months, provide shortages, longer contract durations and sharp progress in costs all stay intact as funding drivers.”
