Feb 26 (Reuters) – Nvidia’s much-awaited results, seen as a barometer of AI chip demand, could prove to be an inflection point for artificial intelligence stocks that have fueled the market’s rally in the last two years. Investors have benefited significantly from the AI boom, largely driven by the so-called “Magnificent Seven,” including Nvidia, Microsoft, and Tesla. Despite concerns over high valuations and data center spending cuts, Nvidia has consistently exceeded revenue and earnings estimates for eight quarters, according to LSEG data. “Nvidia has the heavy task of lifting the market mood this week,” said Ipek Ozkardeskaya, market analyst at Swissquote Bank. The stock rose 2.6% in premarket trading, recovering from a selloff due to weak consumer confidence. Nvidia, the world’s second most valuable company, has added about $2.7 trillion in market value since ChatGPT’s debut in November 2022. Its near 1,800% surge in five years makes it the leader of the Mag Seven, which have tripled on average, compared to the S&P 500’s 65% gain. In 2025, however, these stocks have stumbled, with the Mag Seven down 4.5%, while the rest of the S&P 500 gained 4.4%. Options imply a 7.7% swing in Nvidia shares post-results, consistent with its historical average. Despite its rally, Nvidia’s stock trades at a lower premium, with a price-to-earnings ratio of 28, down from 36 a year ago. A recent $593 billion market cap loss in January highlighted risks in the AI trade. “Given Nvidia’s first mover advantage and tech giants’ infrastructure investments, its high-end chips will remain in demand,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. — news from Reuters
