Nvidia earnings could test Wall Street's AI rally

Nvidia's results have become a market-wide event

Nvidia is due to report after the US cash close on Wednesday 20 May, and the results now matter well beyond a single stock. With a market capitalisation of about $5.4tn, the company is one of the biggest drivers of US equity indices and a key reference point for the AI trade.

The scale of that influence is striking. Nvidia has a weighting of roughly 13.75% in the Nasdaq 100 and about 8.0% in the S&P 500, so a sharp move in the shares can quickly become an index-level event. That is why this earnings release may be treated by traders almost like a major macro data point, alongside releases such as US CPI or non-farm payrolls.

Semiconductor stocks have also concentrated a large share of this year's equity gains. The SPDR Semiconductor ETF has risen more than 70%, leaving the sector in one of its most overbought positions for years. That does not end the rally by itself, but it raises the bar for Nvidia to keep the momentum intact.

SPDR Semiconductor ETF and Nasdaq 100, daily

Sources: TradingView, Luis Francisco Ruiz.