The stock market’s biggest day of the quarter has arrived. Today’s edition covers everything you want to know ahead of Nvidia’s earnings report, which will publish after the closing bell this afternoon.

Spoiler: The charts below are wild.

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Nvidia is a ChatGPT story

There is a universe in which ChatGPT was never invented. 

In that universe, Nvidia is probably not worth $3.16 trillion. 

Shareholders around the world are certainly happy that we live in a world where the opposite is true.

Nvidia’s success — as measured by earnings and market capitalization — has accelerated at an unprecedented rate since OpenAI team released their popular AI tool in November 2022.

After the bell Wednesday, analysts expect Nvidia to report second-quarter adjusted earnings of $0.65 a share, with revenue of $28.74 billion, according to FactSet. 

Should those estimates hold, that would more than double the figures seen in the same quarter a year ago. 

However, a testament to Nvidia’s absurd dominance is that two-fold growth would actually mark a slowdown. Last quarter, Nvidia’s revenue tripled year-over-year.

Revenue has increased by nearly five times since the quarter before ChatGPT hit the scene.

Meanwhile, since November 2022, Nvidia’s stock price is up roughly 900% and the company has gained about $3 trillion in market cap. 

In fact, almost all of the stock’s gains in the last three years have happened after that date, which again illustrates how pivotal of an invention ChatGPT has been for Nvidia shareholders.

But investors increasingly want to bet on more than just ChatGPT-related enthusiasm.

They will be looking for reassurance on the latest earnings call as to whether this historic run can continue. 

In particular, executives led by CEO Jensen Huang will need to share details on demand for Nvidia’s next-generation Blackwell chips and how the next year of sales will pan out. 

“At this point, there’s still so much more demand for their AI [products] than the amount of supply they can produce,” said Morningstar chief market strategist Dave Sekera.

“They can charge whatever they want and people are paying whatever they’re asking.”

To Bank of America strategists, it’s possible that investors are not focused enough on a potential negative surprise from Nvidia. 

Given that this one stock accounts for more than 6% of the S&P 500, any weakness in earnings is likely to rattle the entire market.

Options data measured by Bank of America implies as much as a 10% swing for Nvidia stock near the earnings call. 

For what it’s worth, the stock hasn’t dropped more than 8% on an earnings day since 2018.

That said, even an 8% move in either direction would represent some $250 billion changing hands.

Comments or feedback? Hit reply to this email or let me know on X @philrosenn.

Elsewhere:

👀 A prominent short-seller is betting against Super Micro. Hindenburg Research published a report Tuesday alleging red flags in the tech stock, which has seen meteoric gains the last two years. Before this week, it had returned roughly 90% in 2024. The new report, though, sent the stock down 2.5%. (MarketWatch)

📈Consumer confidence jumped more than expected. The Conference Board’s survey for August showed respondents feel better about their present situation and expectations for the future. However, one measure showed that consumers feel less confident about the labor market and job opportunities. (Conference Board)

🏠️ Home prices just hit a record high. The S&P/Case-Shiller index showed national prices climbed 5.4% compared to a year ago in June. While home prices are at all-time levels, the pace of gains did slow down slightly. New York saw the highest annual price gains at 9%. (S&P Global)

Rapid-fire:

Last thing:

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