Nvidia earnings could signal AI slowdown or app advancement – depending on results

Nvidia's earnings this week are being watched closely by Wall Street, but they will also affect billions of people who rely on the company's chips to use apps, devices and online services.

The California-based company, the first to cross the $4 trillion mark in market value, designs the processors that power ChatGPT and TikTok’s recommendation engine. Snapchat’s augmented-reality features also rely on AI models that have been supported by Nvidia technology.

The company is forecast to announce revenue of $45.9 billion for its second fiscal quarter on Wednesday, after the market closes, Reuters reported.

Powering AI

“Nvidia’s products power the AI technology behind many devices and services we use daily,” said Jesse Jarvis, chief executive of data company Kaiko.

If Nvidia's earnings are strong, platforms may accelerate the introduction of smarter recommendations, new creative tools and more advanced filters.

Users could see features including generative video or improved safety moderation reach their apps faster. But if supply remains constrained or costs rise, innovation could slow down and companies may look to recover costs.

That could mean delays in new features, higher subscription costs for AI services such as ChatGPT Plus, or more premium add-ons inside social apps.

The effects extend beyond software. Nvidia chips also power gaming PCs, laptops and cars, meaning shortages or price pressures could filter through to a wide variety of products.

In workplaces, Nvidia-backed AI systems are already being used to handle tasks once performed by people, raising the prospect of greater productivity and increased automation pressure on jobs.

Looking ahead, Mr Jarvis said consumers could expect “faster AI-powered applications, more accessible entry-level tools and the rise of new AI-integrated devices”.

'Golden chips'

Daniel Ives, managing director at Wedbush Securities, called this “a monster week for the AI revolution and tech stocks with Nvidia earnings on deck”. He said demand for Nvidia’s processors continued to outpace supply. “From our Asia field checks, demand to supply is 10:1 for Nvidia's golden chips," he added.

Mr Ives said the coming results could spark another rally in technology stocks. “We believe Nvidia earnings on deck are another positive catalyst for tech stocks and a reminder this is still only the bottom of the second inning in the nine-inning game around building out the AI revolution over the coming years to enterprises/consumers globally," he added.

But Nvidia’s dominance extends well beyond the technology sector, said Josh Gilbert, market analyst at eToro. “In the same way Apple symbolised the smartphone era, Nvidia now defines the AI era,” he said.

He noted that the company’s outsized role, comprising about 8 per cent of the S&P 500 – the largest weighting in history – increased the pressure to deliver.

Even small disappointments, he added, could spark volatility across global markets.

Path to affordability

AI pricing will follow the same trajectory as other breakthrough technology, said Fadi Ghandour, executive chairman of Wamda Group.

“AI, like all other new technologies, will start expensive and will very quickly move to become lower cost until it becomes ubiquitous and available to everyone at affordable prices,” he said.

He referred to Moore’s Law, saying AI could act as an “extension of brain power, multiplying our abilities to solve complex problems and have very complex information available to us instantaneously”.

Mr Jarvis echoed that sentiment, saying that while the cost of using AI is dropping quickly, large enterprises may still face higher overall bills. “The cost of using AI is falling quickly due to innovations, better efficiency and competition, making it easier for smaller businesses and individuals to access powerful tools and solutions,” he added.

Competition is growing from companies such as DeepSeek in China, which recently launched a new model, optimised for Chinese-made chips and designed to offer high performance at lower cost.

Mr Jarvis said competition played a key role in making AI cheaper for users. “New challengers put pricing pressure on incumbents, promote open-source models that reduce licensing costs and design smaller, more efficient systems that require less computing power and energy than the massive models of established firms,” he said.

The Middle East is also increasing investment in the sector, with Saudi Arabia and the UAE building massive AI-driven data centres alongside Nvidia and US hyperscalers.

Analysts say such spending will expand the use of AI in the coming years. “We are still in the early days of the AI revolution as the use cases are just starting to massively expand,” Mr Ives said. This week’s earnings will be “another 'flex the muscles' moment for [Nvidia chief executive] Jensen [Huang] and Nvidia, as well as the AI revolution bull thesis”, he added.