Watch out: These stocks are the most correlated to Nvidia as the earnings get set to hit the Street

Nvidia is set to report its fiscal Q2 earnings with analysts forecasting $46.02 billion in revenue, a 53% year-over-year increase primarily driven by its data center business. A strong report is expected to further elevate its over $4 trillion market capitalization and positively impact highly correlated semiconductor equipment suppliers such as KLA Corporation, Lam Research, and Applied Materials. Investors are also keenly watching for updates on Nvidia's product roadmap, including the potential for its next-gen Rubin AI processor to unlock a new total addressable market and sustain robust demand in AI compute.

Analysis

Expectations for Nvidia's fiscal second-quarter earnings are exceptionally high, with LSEG consensus forecasting a 53% year-over-year revenue increase to $46.02 billion, predominantly fueled by its data center business which now accounts for 88% of total sales. Beyond the headline figures, investor focus is on the company's product roadmap and its potential to unlock new growth avenues. A key catalyst highlighted is the forthcoming 'Rubin' AI graphics processor, a unified CPU-GPU engine that could expand the total addressable market by significantly improving workload efficiency and lowering computational costs. The market has priced in much of this optimism, with Nvidia's valuation exceeding $4 trillion, indicating that both the earnings print and forward guidance must be strong to sustain momentum. Furthermore, market correlation studies identify semiconductor equipment manufacturers KLA Corporation, Lam Research, and Applied Materials as stocks whose fortunes are tightly linked to Nvidia's performance, making its earnings report a significant event for the broader semiconductor ecosystem.

Key Decisions for Investors

• Investors should look beyond the headline earnings and revenue figures, paying close attention to forward-looking guidance and any commentary on the 'Rubin' processor, as these will be critical in justifying the company's premium valuation.
• Consider monitoring the highly correlated semiconductor equipment stocks KLA Corporation, Lam Research, and Applied Materials, as a positive report from Nvidia could serve as a leading indicator for increased capital expenditure and demand in the sector.
• Given the extremely positive sentiment and the data center business comprising 88% of sales, any sign of softening demand or a conservative outlook presents a significant downside risk, suggesting that investors with concentrated positions may consider protective strategies.