"If NVIDIA sneezes, everyone catches a cold," stated Luke Rahbari, CEO of Equity Armor Investments. As the undisputed pillar of the U.S. stock market bull run in recent years, NVIDIA's share price has been range-bound for several months. Since the fourth quarter of last year, NVIDIA's stock has risen only 1.7%, underperforming the S&P 500's 3.3% gain over the same period. Since the start of 2026, NVIDIA's returns have fallen into the lower half of the S&P 500.
This Wednesday, NVIDIA will release its highly anticipated fourth-quarter and full-year financial results. Wall Street consensus suggests that the performance will remain strong, potentially even "crushing" analyst expectations. However, amid growing skepticism about AI and macroeconomic turbulence, the real question is: Is "good" still good enough?
Can the "World's Most Important Earnings Report" This Week Provide a Boost? "Fundamentally, NVIDIA's story remains robust; the issue is whether market sentiment can keep up," commented Matt Stucky, Chief Equity Portfolio Manager at Northwestern Mutual Wealth Management Company. Investors are facing a classic "expectations paradox." While the market widely anticipates NVIDIA will raise its guidance for upcoming quarters, historical data shows that the stock experienced sell-offs following its past two earnings releases.
Rhys Williams, Chief Strategist at Wayve Capital Management, warned that the stock price could decline if the results are perceived as "not good enough." "Based on our observations, even if the official earnings and guidance are solid, they might simply fail to meet elevated expectations," Williams noted.
This dilemma is not unique to NVIDIA. The "Magnificent Seven" (Mag7) tech giants, previously the market's largest contributors, have collectively declined nearly 1% since Q4 last year, underperforming the S&P 500 index over the same period. Behind this investor caution lies deep anxiety over whether the hundreds of billions in AI capital expenditure by these giants will translate into actual profits. Microsoft's stock declined after releasing strong earnings, precisely because investors focused intently on slowing Azure growth and record-high spending projections.
Macroeconomic Headwinds: When AI Meets a Complex 2026 Beyond sector-specific valuation adjustments, NVIDIA must also navigate a complex macroeconomic environment. The beginning of 2026 is fraught with uncertainty. Geopolitically, threats from the Trump administration against Iran have kept markets on edge. On the policy front, the Supreme Court's recent rejection of former President Trump's tariff policies—though generally seen as positive for U.S. companies—has also clouded the outlook for the White House's subsequent economic agenda.
Economic data presents a mixed picture. Figures released on Friday indicated slowing economic growth alongside persistent inflation. After a "weak 2025," the labor market shows signs of stabilization, but this has conversely led traders to bet that the Federal Reserve will approach further interest rate cuts cautiously. Against this noisy macroeconomic backdrop, the challenge for NVIDIA to reverse its fortunes solely through its earnings report is considerable.
Valuation Opportunity or Value Trap? However, the months of stagnation are not without benefit—they have squeezed significant泡沫 from NVIDIA's valuation. Currently, NVIDIA's forward price-to-earnings ratio has fallen below 24 times, nearing its lowest point in five years and well below its five-year average of 38 times. Will McMahon, Chief Equity Strategist at MFA Wealth, believes that the relatively cheaper valuation could act as a buying catalyst: "People still view NVIDIA as the market's savior, hoping it can calm the current volatility in sentiment."
But a low valuation is merely an entry ticket. To restart the upward trend, CEO Jensen Huang must successfully articulate a new narrative, particularly regarding the defense of its market share. As competitors like AMD, Amazon, Broadcom, and Alphabet (Google's parent company) launch their own "inference chips" for generative AI models, the competitive landscape is undergoing subtle shifts. Alec Young, Chief Investment Strategist at Mapsignals, pointed out that until the market is convinced NVIDIA can maintain its market share and order flow, its valuation multiples will continue to face compression.
Matt Stucky added, "Long-term, the key to boosting sentiment hinges on whether Jensen Huang can compellingly argue that NVIDIA will maintain its dominance in the 'inference market.' This is core to supporting its long-term investment thesis."
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