Nvidia Earnings Set for $260 Billion Swing, as $4 Trillion Market Cap Needs Justification

Nvidia will report earnings after the bell on Wednesday in what is shaping up to be a pivotal moment for both the AI trade and broader market sentiment. Options markets are signaling the potential for a sharp move, with contracts implying a 6.1% swing in either direction — equivalent to about $260–270 billion in market value. That figure alone exceeds the market capitalization of most S&P 500 companies.

Despite the eye-popping number, this is the smallest implied post-earnings swing since early 2024, when options priced in a bigger move. Historically, Nvidia’s realized earnings-day volatility has tended to undershoot expectations: over the past eight quarters, its actual average swing was 5.9%, compared with an 8.6% average implied by options. Over the last 12 quarters, the implied move averaged 7.7%, while the realized move was close at 7.6%, according to ORATS.

Some strategists argue the real story may be less about Nvidia itself and more about its ripple effects across the speculative AI trade. “A lot of these really high-flyer, speculative AI names have come off a lot, but Nvidia is basically back right below its all-time high,” said Chris Murphy, co-head of derivatives strategy at Susquehanna. “If Nvidia beats expectations, that would support some of the harder hit, more speculative areas of the AI trade.”

Wall Street analysts remain optimistic heading into the results. Piper Sandler expects “another positive quarter” supported by strong U.S. hyperscaler spending and the potential resumption of China demand under new licensing rules. The broker raised its price target to $225 from $180, forecasting July-quarter revenue of about $45.1 billion, in line with guidance, but seeing upside if China sales add as much as $6 billion in the October quarter and ramp further into 2026.

Bank of America is similarly constructive, projecting July-quarter revenue of $47 billion versus the company’s $45 billion guidance and October-quarter revenue of up to $60 billion if H20 chip shipments to China restart. It expects gross margins to reach 73–74% by the third quarter, with further upside if previously written-down inventory is utilized. Looking further out, BofA estimates fiscal 2026 revenue could rise toward $210–215 billion, with pro forma EPS between $4.70 and $4.80, ahead of consensus.

At the same time, Nvidia’s $4 trillion market valuation looms large. “The assumptions and performance of Nvidia really dictate what the market is going to start to price into the AI trade, and that whole AI trade has essentially been driving the market this past year,” said Melissa Otto, head of Visible Alpha Research at S&P Global.

Investors will be watching closely for guidance from CEO Jensen Huang, particularly for the fiscal third quarter, where consensus calls for revenue growth of 50% to $52.7 billion. A strong “beat and raise” quarter could reinforce AI optimism and sustain Nvidia’s market leadership. Conversely, any shortfall or cautious outlook could raise questions about whether its $4 trillion valuation — and the broader AI trade it underpins — can be justified.