Nvidia has become world's ‘most important stock,' adding pressure to upcoming earnings report

Nvidia's stock has turned increasingly volatile as investors look for any sign that large cloud providers are showing a changed appetite for artificial intelligence processors.

Nvidia's report comes weeks after its mega-cap tech peers got through earnings. The company's name was sprinkled throughout those analyst calls, asRapper Sean Kingston and his mother plead not guilty to organized fraud and grand theft charges Investors will be paying particularly close attention to Nvidia's forecast for the October quarter. The company is expected to show growth of about 75% to $31.7 billion. Optimistic guidance will suggest that Nvidia's deep-pocketed clients are signaling an ongoing willingness to open their wallets for the AI buildout, while a disappointing forecast could raise concern that infrastructure spending has gotten frothy.

But while Nvidia's profit margin has been expanding of late, the company still faces questions about the long-term return on investment that clients will see from their purchases of devices that cost tens of thousands of dollars each and are being ordered in bulk.suggesting that cloud providers, which account for over 40% of Nvidia's revenue, would generate $5 in revenue for every $1 spent on Nvidia chips over four years.

While Nvidia's current generation of chips, called Hopper, remain the premium option for deploying AI applications like ChatGPT, competition is popping up from, Google and a smattering of startups, which is pressuring Nvidia to maintain its performance lead through a smooth upgrade cycle.

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