Nvidia (NVDA) earnings are arguably the biggest market event of the week. The megacap makes up a whopping 7.4% of the S&P 500 alone (13.7% of Nasdaq-100 and 2.4% of the Dow), meaning any substantial move could roil entire indexes. The options market is implying a +/- $12 move, or a little over 6.5%.

The market is starting to pull back from the tech trade a bit as fears of a bubble rise, and many are looking to Nvidia to see if those fears are realized. Zacks anticipates EPS of $1.24 (+53% vs last year) and revenue of $54.86 billion (+55% vs last year). These growth trajectories are still strong, but will markets be expecting more with the billions upon billions poured into AI capex this year?

Nvidia is also battling various restrictions, both on exports of their chips and imports of the rare earths needed to create them. Companies like Alphabet (GOOGL), OpenAI, and others have all been making huge commitments to building out AI infrastructure, but if Nvidia says it isn’t in a position to maintain supply, timelines across industries could be thrown out of whack. It will be important for investors to hear confidence from CEO Jensen Huang on the earnings call, along with strong guidance.

Several notable investors have been liquidating their stakes in the stock recently, including Peter Thiel’s hedge fund (around $100 million) and SoftBank (almost $6 billion). This isn’t just taking some gains: both sold their entire holdings. While prominent investors pulling out may worry traders, SoftBank noted that it put the money into OpenAI instead, so the AI trade is still on.

The market is beginning to wonder where AI returns are. Nvidia (NVDA) has charted incredible growth on the top and bottom line over the last few years, but the curve is beginning to level, and these capex commitments need to stabilize. Nvidia will need to prove that data center demand continues, and that it remains ahead of rivals both in innovation and fulfillment. The stock is up 27% vs last year and is up 35% year-to-date, but has been coming off highs recently.

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