Nvidia Earnings to Weigh on AI Bull Run as Skeptics Watch for Bubble Signs

The S&P 500 moved in a tight range on Monday as investors braced for Nvidia's upcoming third-quarter earnings and a wave of key economic data. Futures for the main U.S. indexes climbed modestly, signaling cautious optimism ahead of the week's major events. The market's focus on the AI sector has intensified, with Nvidia at the center of a broader debate about the sustainability of the AI investment boom.

Nvidia CEO Jensen Huang has already stirred the market with a surprise forecast of $500 billion in orders for AI chips across 2025 and 2026. The figure, revealed at the company's GTC conference, has raised expectations for future revenue and highlighted the company's confidence in the AI boom's staying power according to CNBC reports. Analysts have interpreted the remark as a sign that 2026 sales could exceed current estimates by as much as $60 billion.

Nvidia's stock, however, has been trading lower since Huang's comments, reflecting investor uncertainty about the AI sector's trajectory. Some question whether the current momentum is built on over-optimism, particularly with hyperscalers and AI labs making aggressive infrastructure investments as analysts have noted. This skepticism has kept a lid on tech stocks more broadly, despite a strong earnings season so far.

The AI Earnings Spotlight

Nvidia is the week's biggest focus due to its outsized influence on the tech sector and the broader market. The company accounts for about 8% of the S&P 500 and nearly 10% of the Nasdaq Composite, making its results highly significant for investors. Analysts expect the firm to report $1.25 in earnings per share on $54.83 billion in revenue, which would mark a 56% year-over-year increase as reported by market sources.

Beyond the numbers, investors are watching for guidance on 2026, particularly around the company's next-generation Rubin GPU and its Blackwell chips. Analysts at Wedbush said they expect "good news" and a strong beat, arguing that Nvidia is a foundational force in the AI revolution according to Wedbush analysts. The firm has an Outperform rating on the stock and a $210 price target.

Skepticism and the "AI Bubble" Debate

Despite the bullish outlook from some analysts, concerns linger about an AI-driven market overvaluation. The fear of a potential "AI bubble" has gained traction after several high-profile deals and stock surges tied to AI technologies. Analysts at Vital Knowledge noted that even strong results from Nvidia may not fully dispel these concerns, as the company's success could be seen as a sign of ecosystem imbalance as observed by financial analysts.

The debate is not just speculative. Some investors believe that the current AI spending spree could slow if hyperscalers and AI labs reassess their capital expenditures. Wedbush analysts acknowledged this risk but argued that Nvidia is well-positioned to provide clarity on the AI spending trend according to Wedbush analysts. The firm sees the company's earnings as a "validation moment" for the broader AI revolution.

Broader Market Implications

Nvidia's results could influence more than just its own stock. The company's performance is closely tied to the health of the AI sector and, by extension, the broader tech and financial markets. With the S&P 500 enjoying a strong earnings season so far, investors are keenly aware that a disappointing result could reignite volatility as market sources have reported.

The timing is also critical. The U.S. government has just emerged from its longest-ever shutdown, and key economic data, including the delayed September jobs report, will be released in the coming days. Traders are closely watching for signs of economic softness or resilience, with the Federal Reserve's next rate decision a key variable as reported by financial analysts.

What This Means for Investors

Investors are split between cautious optimism and fear of overvaluation. While analysts like Wedbush's Daniel Ives expect Nvidia to deliver strong numbers and guidance, they also see the results as a pivotal moment for the AI narrative according to market analysts. The firm believes a positive print could be a catalyst for tech stocks heading into year-end.

For now, markets are in a holding pattern. Futures suggest a modest upward bias, but volatility remains high as investors await key data points and earnings results. If Nvidia confirms its leadership in the AI boom, it may bolster confidence in the broader market. But if the results fall short of expectations, it could reignite concerns about the sustainability of the current tech rally.