Nvidia to report Q3 earnings amid investor concerns of AI overbuilding

Nvidia (NVDA) will report its highly anticipated third quarter earnings after the bell on Wednesday, its first such announcement since the company’s market capitalization briefly eclipsed $5 trillion last month.

The chip giant is the most important bellwether for the AI trade, with any miss or beat on projections set to impact price action on a wide array of AI stocks.

But according to Deepwater Asset Management managing partner Gene Munster, a beat and raise scenario may not necessarily be a good thing for the broader AI trade.

“The cross currents around next week’s earnings set up a Catch-22 for the AI complex, because stronger guidance can amplify worries about overspending, while a modest raise can be read as the first sign that growth is normalizing faster than expected,” he wrote in a note to investors.

The report comes after Peter Thiel’s hedge fund sold off its entire roughly $100 million stake in Nvidia. SoftBank Group (SFTBY) also unloaded all of its Nvidia stock, valued at $5.8 billion, as the company seeks to fund its own enormous AI bets.

It also follows remarks from Advanced Micro Devices (AMD) CEO Lisa Su during the company’s Financial Analyst Day, during which she said that she believes the data center market will be worth as much as $1 trillion by 2030.

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