Financial Report Outlook | Under the torrent of Token reasoning, NVIDIA Corporation (NVDA.US) faces the interrogation of cyclical financing! The market awaits Rubin to ignite the "6 trillion dollar" narrative.

The moment that global AI computing power-focused investors have been waiting for is fast approaching. Since OpenAI developed ChatGPT, which has swept the globe, and the unprecedented rush of investment in artificial intelligence has begun, Wall Street institutional investors and retail investors worldwide have been eagerly awaiting this moment every quarter: the release of NVIDIA Corporation's (NVDA.US) second-quarter earnings report, the most important stock on Earthdubbed the "AI chip super ruler." Other major tech companies, including Microsoft Corporation, Alphabet Inc. Class C, Amazon.com, Inc., and Tesla, Inc.known as the Magnificent Sevenreleased their earnings nearly a month ago, and now NVIDIA Corporation will finally disclose its detailed financial performance and outlook for future quarters. The so-called "Magnificent Seven," which hold a significant weight in the S&P 500 and Nasdaq 100 indices (over 40%), includes NVIDIA Corporation, Apple Inc., Microsoft Corporation, Alphabet Inc. Class C, Tesla, Inc., Amazon.com, Inc., and Meta Platforms, the parent company of Facebook. These stocks are seen as key drivers of the S&P 500 index's record highs and are regarded by Wall Street's top investment firms as the most capable portfolio for delivering substantial returns to investors against the backdrop of the most significant technological transformation since the Internet era. The "AI super bull market," which has seen the S&P 500 index rise by over $30 trillion in the past three years, is largely driven by giants considered best positioned to benefit from the AI boomnamely, the largest tech giants (the seven major U.S. tech firms)and is also strongly propelled by chip companies that have significantly benefited from massive investments in global AI computing power infrastructure (such as SK Hynix, Samsung Electronics, Micron, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, and Broadcom Inc.), storage giants (SanDisk, Western Digital Corporation, and Seagate), and power system suppliers (like Constellation Energy). As NVIDIA Corporation's earnings report approaches, the stocks of global chip producers, especially those closely tied to AI computing power themes, have struggled to maintain their price rebounds since a significant decline in July, reigniting market concerns about whether global enterprises can achieve strong returns from their unprecedented investments in artificial intelligence. Therefore, investors are eagerly looking to find out whether the demand for NVIDIA Corporation's next-generation AI computing clusterVera-Rubin will show an even stronger performance than the Blackwell architecture and how NVIDIA Corporation's management, including Jensen Huang, views the future revenue prospects from B-end and C-end AI applications. Strong growth data from Microsoft Corporation, Amazon.com, Inc., and Alphabet Inc. Class C related to their respective cloud computing businesses has helped alleviate investor concerns, at least to some extent; however, the increasing AI computing power infrastructure spending by Alphabet Inc. Class C and Meta has also made investors uneasy. NVIDIA Corporation's forthcoming earnings for the second quarter of fiscal year 2027 have evolved from merely a "chip leader's earnings" to a system-level stress test of the global AI capital expenditure cycle. Wall Street anticipates revenue of approximately $92 billion and adjusted earnings per share (EPS) of $2.09, with data center revenues expected to reach an astonishing $85.4 billion, reflecting a year-on-year growth of 107%. However, the financial giant Jefferies has raised its "real bullish threshold" to $95 billion for the second quarter and approximately $108 billion for the next quarter. The options market has accounted for about 6% to 7% of bidirectional volatility, corresponding to changes in market capitalization exceeding $320 billion, and despite NVIDIA Corporation's consecutive four strong earnings reports and outlooks exceeding expectations, its stock still fell the following day, indicating that simply beating market consensus expectations is no longer sufficient to drive a new round of strong gains in the AI computing power supply chain. The $92 billion "computing power test"! NVIDIA Corporation's earnings are set to become the trigger for AI trading. According to analysts' aggregated expectations, NVIDIA Corporation is anticipated to achieve adjusted EPS of $2.09 in the second quarter, with revenue around $92 billion. This implies a staggering year-on-year jump of 96% in total revenue, continuing to show an accelerated growth trajectory against a high baseline. NVIDIA Corporation updated its financial reporting framework last quarter, segmenting its data center revenue into hyperscale cloud service providers' revenue for giants like Alphabet Inc. Class C, Microsoft Corporation, and Amazon.com, Inc., and revenue data from AI cloud, industrial, and enterprise customers (ACIE). The revenue from its personal computers, gaming consoles, workstations, Siasun Robot & Automation, and automotive business is now included in NVIDIA Corporation's edge computing segment. According to Wall Street analysts consensus, NVIDIA Corporation's data center business revenue for the second quarter is expected to surpass $85.4 billion, indicating a potential year-on-year growth of 107%. Revenue from hyperscale cloud service providers is projected to reach $43.5 billion, while ACIE business sales are expected to hit $41.7 billion. The bulk of NVIDIA Corporation's revenue continues to come from hyperscale cloud service providers like Amazon.com, Inc., Alphabet Inc. Class C, and Microsoft Corporation. However, these global cloud computing leaders are increasingly designing their own AI chips and server CPUs to reduce their reliance on NVIDIA Corporation's computing power infrastructure, and have even begun focusing on selling AI computing clusters built around their self-developed chips to large third-party clients, which may pose a long-term relative disadvantage to NVIDIA Corporation. NVIDIA Corporation is also continuing to sign partnership agreements with numerous tech and finance companies within the AI ecosystem. Earlier this month, this AI chip leader announced that it is collaborating with BlackRock, Inc., Blackstone, KKR, Apollo, Bruker Corporation, and Goldman Sachs Group, Inc. to establish a $500 billion capital pool aimed at promoting the securitization of large-scale NVIDIA Corporation AI GPU assets. Recently, NVIDIA Corporation also stated that it will support SB Energy and OpenAI in constructing a massive 8-gigawatt data center in Ohio, with an investment of up to $150 billion. NVIDIA Corporation is collaborating with BlackRock, Inc., Blackstone, KKR, Apollo, Bruker Corporation, and Goldman Sachs Group, Inc. to establish a $500 billion capital pool, and support SB Energy and OpenAI in building an 8-gigawatt data center with an investment of up to $150 billion. These developments indicate that NVIDIA Corporation's growth model surrounding GPUs is evolving from simply selling GPUs to a full-stack AI ecosystem comprising "AI chips + high-performance network infrastructure + a developer ecosystem around CUDA and NVIDIA's open-source large models + long-term capital." Especially, NVIDIA Corporation seems to be increasingly focused on reducing clients' upfront capital pressure for AI computing power through GPU securitization and project financing, trying to convert large orders for AI chips or AI computing clusters into long-term, financeable, leaseable computing power assets. However, this also binds NVIDIA Corporation more closely to customer utilization rates, AI application monetization, and debt repayment capacity; should growth in AI inference revenue fail to cover high computing costs, ecological financing commitments and GPU residual values could become new channels of risk transmission. Is a $5 trillion market capitalization not the endpoint for NVIDIA Corporation? High growth and high expectations collide positively. Currently, NVIDIA Corporation is valued at approximately $5.25 trillion, significantly higher than Apple Inc., which is ranked second with around $4.5 trillion. However, some analysts bullish on NVIDIA Corporation's stock price prospects believe that the gap between the two will widen rapidly, starting this week when NVIDIA Corporation announces its second quarter earnings on August 26, Eastern Time. Prior to the earnings announcement this year, the expectations faced by NVIDIA Corporation were actually not that high. For 2024 and 2025, prior to the second quarter earnings release, the anticipated price-to-earnings ratio for NVIDIA Corporation was around 35 times. For most periods this year, it was only about 24 times, which is quite reasonable. With a market capitalization of $5.25 trillion, NVIDIA Corporation only needs to rise about 14% to break through $6 trillion; if the anticipated price-to-earnings ratio rises to a relatively optimistic 35 times, the theoretical upside could be about 46%, corresponding to a market cap of approximately $7.65 trillion. Supporting this expectation is the ongoing expansion of AI infrastructure, the continued doubling of data center revenue, and NVIDIA Corporation's systemic advantages in GPUs, Ethernet high-performance networking, and AI application software developer ecosystem. However, Amazon.com, Inc., Alphabet Inc. Class C, and Microsoft Corporation are accelerating their deployment of self-developed ASIC/XPU chips, and the return on AI investments has also become a key focus for market scrutiny. Thus, this earnings report may not only serve as a starting gun for a renewed acceleration in AI trading but could also mark a pivotal turning point from "nearly infinite computing power demand" to validating "sustainable cash flow growth for the entire AI ecosystem." If NVIDIA Corporation's performance and future outlook significantly exceed market expectations, particularly demonstrating that the demand for Vera-Rubin far surpasses consensus projectionssuch as if Vera-Rubin orders are expected to exceed $1 trillion over the next two years and the anticipated price-to-earnings ratio rises to a relatively optimistic 35 timesthen NVIDIA Corporation's stock price is likely to see a substantial rise, pushing its market capitalization above $6 trillion before the end of 2026. Based on NVIDIA Corporation's current valuation of $5.25 trillion, a 46% rise would bring the company's market cap to $7.65 trillionwell beyond the levels forecasted by Wall Street analysts covering NVIDIA Corporation's stock. NVIDIA Corporation only needs to rise 14% to reach $6 trillion, leading analysts to believe that it reaching the $6 trillion mark shortly after the earnings announcement is a reasonably reliable prediction. This makes it an exceptionally attractive stock at present; even if its valuation does not rebound to typical levels, 2027 is likely to be a very strong performing year for this stock, as its still-robust growth rate suggests the valuation in early 2027 will be at quite a low level. If NVIDIA Corporation announces a quarterly earnings far exceeding expectations and provides strong third-quarter guidance, this could ignite a rally, pushing NVIDIA Corporation's valuation back to the levels it typically sees around this time of yearabout 35 times the expected price-to-earnings ratio. If NVIDIA Corporation can achieve this, its market capitalization will rise to heights never before reached by any company. For NVIDIA Corporation, exceeding expectations has become the norm. In the fourth quarter of fiscal year 2026, NVIDIA Corporation management expected revenue of $65 billion, but the actual revenue was $68 billion. In the first quarter of fiscal year 2027, the management guidance was $78 billion, yet NVIDIA Corporation actually generated $82 billion in revenue. Such levels of exceeding expectations have become a market norm; with NVIDIA Corporation management projecting second-quarter revenue to reach $91 billion, most investors anticipate actual revenue will at least hit $92 billion. However, Wall Street powerhouses like Jefferies have set expectations higher, with a forecast of $95 billion or even more. For these more stringent investors, NVIDIA Corporation's revenue was $46.7 billion in the second quarter of last year; this means to achieve a year-over-year doubling for the second quarter of fiscal year 2027, revenue would need to reach $93.4 billion. Rubin is poised to take over from Blackwell, and could NVIDIA Corporation's earnings report signal the onset of a new wave of AI computing power trends? Using the August 21 closing price of $214.72, approximately $242.2 billion in outstanding shares, and a market capitalization of $5.20 trillion as a standard reference, 59 Wall Street analysts give NVIDIA Corporation a "strong buy" consensus with an average target price of $304.73, implying a potential upside of about 41.92%; this would correspond to a market cap of about $7.38 trillion, an increase of approximately $2.18 trillion. The highest target price is set at $500 by Baird analyst Tristan Gerra, indicating a potential stock price increase of around 132.9%, corresponding to a market cap of approximately $12.11 trillion, a potential increase of about $6.91 trillion over the current levels. This market cap projection assumes that the total outstanding shares remain relatively unchanged. Gerra maintains a "outperform" rating and a target price of $500, with the core rationale being that NVIDIA Corporation is upgrading from being a GPU supplier to a full-stack AI platform equipped with CUDA, NVLink, AI Enterprise, and rack-level systems: the company continues to gain market share in the hyperscale cloud computing and inference markets, and the penetration speed of Vera Rubin in cutting-edge model companies may surpass that of Blackwell; the independent Vera CPU is expected to open up an additional market worth about $200 billion thanks to its performance advantages, while AI agents are set to drive annual global AI infrastructure spending from over $1 trillion in 2027 to $3 trillion to $4 trillion by 2030, consistently strengthening NVIDIA Corporation's pricing power, AI application development ecosystem-related revenue, and free cash flow growth. As for NVIDIA Corporation's upcoming earnings and future outlook, the market's primary focus is on the "quality" of demand growth, not just its "scale," which explains why NVIDIA Corporation's earnings have been robust in recent quarters, yet its stock price continues to weaken. Analysts expect that hyperscale cloud vendors and AI cloud, industrial, and enterprise customers (ACIE) will contribute $43.5 billion and $41.7 billion respectively, and if ACIE continues to grow rapidly, it indicates that NVIDIA Corporation is reducing dependency on a handful of clients like Microsoft Corporation, Amazon.com, Inc., and Alphabet Inc. Class C, with demand shifting from training clusters to inference, enterprise intelligence, sovereign AI, and industrial AI. Conversely, if growth remains predominantly from the capital spending of major hyperscale cloud giants, the market will be increasingly concerned about revenue dilution due to these US tech companies' self-developed ASIC/XPU chips. Therefore, the most crucial operational signals in the earnings report focus on whether the customer base continues to diversify, whether GPU utilization rates remain high, and whether token revenues and cloud business growth can prove that computing power procurement is generating real cash flow, rather than merely accumulating idle capacity. The second decisive focal point is the transition from Blackwell to Vera Rubin. Rubin continues the Oberon NVL72 rack form factor, reusing the established power supply, liquid cooling, cabinets, and manufacturing systems from GB200/GB300; if the time to assemble computing trays can be reduced from about 2 hours to 5 minutes, it would imply that NVIDIA Corporation is turning complex AI server projects into modular and scalable "AI factories." Jefferies anticipates that VR/R200 will account for about 12% of GPU revenue by Q3 of fiscal year 2027, exceed 40% in Q4, and become the dominant product by Q1 of fiscal year 2028; the Vera CPU, through LPDDR5X and NVLink consistency interconnect, will unify CPU, GPU, networking, and CUDA software into a rack-level platform. If management confirms that Rubin will be produced on schedule and accelerates significantly starting in Q1 next year, market valuation anchors may shift from "when will Blackwell peak" to "when will Rubin start the next growth curve." The third new narrative is "open model seeding demand + supply chain locked supply." Nemotron, Cosmos, GR00T, Alpamayo, NeMo, and Agent Toolkit may not directly contribute substantial model revenues but can guide developers' workloads to CUDA, TensorRT, NIM, DGX, and RTX platforms, particularly as small language models (SLM) are well-suited for intelligent agent tool calls, enterprise-specific tasks, and edge-side inference. This can help NVIDIA Corporation upgrade from "selling GPUs" to defining token production environments. At the same time, NVIDIA Corporation advances multi-year agreements to secure CoWoS-L advanced packaging, HBM, optical components, land, and power, fundamentally controlling the most scarce inputs for AI factories, making it difficult for competitors with chip design to overcome obstacles related to packaging yield, memory, and delivery lead times. NVIDIA Corporation's initiation of the Nemotron alliance and collaboration with several AI labs to develop open models further strengthens this software-hardware flywheel. The rise in storage prices presents a "double-edged sword" for the earnings report. Current media reports indicate that complete server sets equipped with NVIDIA Corporation chips might see price increases of over 15% due to rising HBM, DRAM, and other storage costs, rather than a uniform 15% price increase for NVIDIA Corporation GPUs. These increases cover the delivery of Grace Blackwell and Vera Rubin systems scheduled for early next year. On one hand, it demonstrates that AI memory, advanced packaging, and overall machine production capacity remain extremely tight, highlighting the bargaining power of bottleneck suppliers like SK Hynix, Micron, Samsung, and Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR; on the other hand, it will raise the total cost of ownership (TCO) per megawatt for data centers, compressing profits for server foundries and enhancing the motivation for cloud vendors to adopt self-developed ASICs to handle mature inference tasks. As a result, the market will closely examine whether NVIDIA Corporation can fully pass on the costs and maintain a gross margin of 70%, while continuing to offset rising server prices through performance/watt and decreasing token costs. NVIDIA Corporation's credit support of up to approximately $105 billion for the OpenAI-SB Energy project and its participation in the $500 billion GPU financing pool can alleviate clients' capital constraints in a high-interest-rate environment, while also positioning it as a threefold entity: equipment supplier, investor, and credit supporter. If the earnings report delivers revenue close to $95 billion and provides guidance for the next quarter around $108 billion, confirms Rubin's acceleration, maintains stable gross margins without significant delivery delays for power and packaging, and clearly defines leasing, power payments, and residual value guarantee liabilities, then the hot trading theme surrounding AI computing power may well expand beyond NVIDIA Corporation's GPU power clusters to encompass the entire AI computing power supply chain, including HBM/DRAM/NAND, CoWoS/3D advanced packaging, MLCC/ABF substrates, data center CPUs, high-performance network infrastructure, optical interconnects, liquid cooling, and data center power chain infrastructure, ushering in a new wave of "main rising wave" super market trends at the industry chain level. If NVIDIA Corporation's performance and quarterly outlook merely slightly exceed expectations, with guidance for the next quarter coming in at around $102 billion to $104 billion, or if commitments for financing, gross margins, and Rubin's mass production timeline remain unclear, it is more likely to result in a scenario of "great earnings but stagnant stock price" at elevated levels. In other words, the next main rising wave trend in the AI computing power supply chain does not depend on whether NVIDIA Corporation can continue to grow, but on whether it can prove that future growth stems from profitable token demand, rather than being sustained by GPU orders created through its own credit cycle.