Whatever Happens on Wednesday, Nvidia Stock Will Almost Certainly Be Cheaper After Earnings

Nvidia is set to report Q2 earnings Wednesday, with analysts forecasting revenue growth of 97.2% to $92.2B. Despite “average” recent stock performance (+19% over the last year, in line with the S&P 500), the article argues the shares look cheaper on forward earnings—23.6x using FY2027 EPS consensus of $9.02—and notes that forward EPS estimates have repeatedly moved higher after prior earnings reports, suggesting valuation could get even more attractive if guidance momentum continues.

Analysis

The market is likely underpricing the second-order read-through from another upward revision cycle: if NVDA keeps forcing FY27 EPS higher, the real trade is not just the stock re-rating, but the entire AI supply chain de-risking around a longer capex runway. That benefits TSM, ASML, AMAT, LRCX, and ANET more than the headline implies, because sustained NVDA demand tends to validate wafer starts, advanced packaging, and networking spend for multiple quarters, not just one print.

The flip side is that the easy upside from "cheap vs. the index" disappears quickly if forward estimates stop outrunning the share price. The biggest near-term risk is not a miss, but a good-enough report that confirms demand while leaving margin or next-quarter guide below the market’s most aggressive assumptions; that would hit multiple expansion first, then pressure the whole SMH/SOXX complex. A softer read on hyperscaler digestion, export restrictions, or a shift toward in-house ASICs (TPU/Trainium/Meta silicon) would be the main 1-3 month catalyst that can reverse the narrative.

Contrarian view: consensus may be too focused on EPS revision momentum and not enough on concentration risk. If NVDA’s growth is increasingly tied to a handful of customers, any capex pause can look like a stock problem long before it becomes an earnings problem. The cleaner relative trade is against AMD, which still needs narrative catch-up and is more vulnerable if NVDA validates another leg of share gains; if that thesis fails, it will likely show up first in guidance language and then in estimate revisions over the next earnings cycle.

Key Decisions for Investors

• Long NVDA / short AMD, beta-adjusted, for a 1-3 month revisions trade into and after earnings; best risk/reward if NVDA raises forward EPS again and AMD underperforms on relative AI share claims.
• Use any post-print selloff in NVDA as an add opportunity only if management commentary confirms continued order visibility and FY27 estimates keep trending up; thesis breaks if forward EPS revisions flatten for two consecutive weeks after the report.
• Overweight SMH or SOXX vs. QQQ for a 1-3 month basket trade if NVDA validates another capex upcycle; the main falsifier is a guide that implies customer digestion rather than acceleration.
• Watch TSM and ANET as cleaner second-order beneficiaries than NVDA itself; if they do not confirm the AI spend thesis over the next earnings season, that would argue the market is over-discounting a durable infrastructure cycle.