Wednesday preview: Nvidia in the spotlight amid fears over AI bubble

(Sharecast News) - Although there are other companies slated to report on Wednesday, all eyes will be firmly on third-quarter earnings from US chipmaker and AI bellwether Nvidia amid growing concerns about an AI bubble. Kathleen Brooks, research director at XTB, pointed out that Nvidia results are treated like a macro event.

"This is because Nvidia is the world's largest company, as measured by market capitalization, it is currently worth $4.53 trillion," she said. "How it performs will have an impact on US and global financial markets. Also, if its stock price falters, then it could threaten the entire AI trade."

In the lead-up to the report, Nvidia's share price is down more 4% in the past five days and testing its 50-day moving average, Brooks noted, adding that a move below this level, at $185.97, would suggest that short-term momentum is to the downside.

Sentiment towards the stock has shifted since it was announced that Japan's Softbank had sold its $5bn stake in the chip maker, while Peter Thiel's fund also sold its entire stake last quarter.

"This does not mean that there is something fundamentally wrong with Nvidia and its earnings report is expected to show that its fundamentals are incredibly healthy," said Brooks. "Instead, large investors may be booking profits from highly lucrative holdings to invest in other, less well-known AI stocks."

The wider AI trade has also come under pressure, with the iShares future AI and tech ETF down more than 10% since peaking at the end of October.

"Analysts are expecting an extraordinary set of results," said Brooks. "Revenues for last quarter are expected to surge to $55.19bn, 57% higher than a year ago. Net income is expected to come in at $30.85bn, a 55% increase compared to a year ago.

"Analysts have upgraded their forecasts for Nvidia's earnings in the past four weeks, and the good news may not stop there. Forecasts for next year also look strong. The company is expected to announce monster profits for the future, with its one-quarter ahead forecast expected to show revenues rising further to $46.14bn in the first three months of 2026."

Brooks added: "One company's results cannot save the AI trade, but it will be interesting to see how the market reacts to another monster earnings report from Nvidia."

Neil Wilson, UK investor strategist at Saxo Markets, said Nvidia's results will be a key moment for sentiment in the market regards the AI trade.

"If that fails then we could be looking around for the September payrolls report on Thursday to provide cover for more Fed rate cuts as the cycle turns," he said. "We could see a more dovish Fed suddenly if the AI trade blows up and labour market cools and inflation remains onside."

In the UK, full-year results are due from Sage, while Severn Trent, British Land, Workspace and Jet2 will post half-year results. Smiths Group will release a first-quarter trading update. In the US, retail giant Target is due to update on its third quarter.

As far as British Land is concerned, UBS said that with much of the numerical reporting complete for HY, it sees more scope for focus on strategy and capital allocation going forward.

"Development lease up is also likely to be in focus with British Land confident to be fully leased on both Norton Folgate and the Aldgate residential scheme by FY26.

"Question marks still hang over 1 Triton Square, Canada Water and Mandela Way. The sustainability of surrender premiums as an income source will be in focus - with BLND benefitting from circa £20m in 1H26."

Wednesday November 19

INTERIMS

British Land Company, Manolete Partners, Manolete Partners, Manolete Partners, Severn Trent, Zoo Digital Group

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Building Permits (US) (13:30)

Crude Oil Inventories (US) (15:30)

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