Nvidia's "stagnation" for months, can this week's "most important global earnings report" make a difference?

“If Nvidia sneezes, everyone catches a cold,” said Luke Rahbari, CEO of Equity Armor Investments.

As the undisputed pillar of the US stock market bull run over the past few years, Nvidia’s stock has been consolidating sideways for months. Since Q4 last year, Nvidia’s share price has only risen by 1.7%, underperforming the S&P 500’s 3.3% gain during 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 Q4 and full-year earnings reports. Wall Street consensus expects performance to remain strong, even “beating” analyst forecasts. But against the backdrop of rising AI skepticism and macroeconomic turbulence, the real question is: Is “good enough” still enough?

Can the “world’s most important earnings report” move the needle this week?

“From a fundamental perspective, Nvidia’s story remains strong; the issue is whether market sentiment can keep up,” said Matt Stucky, Chief Equity Investment Officer at Northwestern Mutual Wealth Management.

Investors are facing a classic “expectation paradox.” While the market generally anticipates Nvidia will raise guidance for the coming quarters, historical data shows that after the last two earnings releases, Nvidia’s stock was sold off.

Rhys Williams, Chief Strategist at Wayve Capital Management, warns that the stock could decline if earnings are “not good enough.”

“Based on our observations, even if the official earnings and guidance are fine, they may just fall short of expectations.”

This dilemma is not unique to Nvidia. The so-called “Mag7” tech giants, which once contributed the most to the market, have declined nearly 1% since Q4 last year, underperforming the S&P 500 during the same period.

Behind investors’ cautious sentiment lies a deep anxiety over whether the hundreds of billions of dollars in AI capital expenditure (Capex) by these giants can translate into real profits. For example, Microsoft’s recent strong earnings report was followed by a stock decline, precisely because investors are fixated on slowing Azure growth and record-breaking spending expectations.

Macroeconomic headwinds—when AI meets a complex 2026

Beyond sector valuation adjustments, Nvidia must also face a complex macro environment.

The start of 2026 is fraught with uncertainty. Geopolitically, the Trump administration’s threats against Iran have kept markets on edge; policy-wise, the Supreme Court recently rejected Trump’s tariffs—generally seen as a positive for US companies, but also making the White House’s subsequent economic policy direction more unpredictable.

Economic data is mixed. Recent Friday reports show economic growth slowing, while inflation remains stubbornly high. After a “weak 2025,” the labor market shows signs of stabilization, but this has led traders to adopt a cautious stance on further rate cuts by the Federal Reserve.

In such a noisy macro environment, Nvidia’s ability to turn the tide with earnings remains highly challenging.

Valuation valley or value trap?

However, months of stagnation may not be entirely without benefit—it has helped deflate some of Nvidia’s bubbles.

Currently, Nvidia’s forward P/E ratio has fallen below 24, approaching its lowest level in five years and well below the five-year average of 38. Will McMahon, Chief Equity Strategist at MFA Wealth, believes that this relatively cheap valuation could serve as a catalyst for buying:

“People still see Nvidia as a market savior, hoping it can quell the current market volatility.”

But low valuation is only a ticket to entry. To reignite the rally, CEO Jensen Huang must tell a compelling new story, especially regarding market share defense.

As AMD, Amazon, Broadcom, and Alphabet (Google’s parent company) launch “inference chips” for generative AI models, the competitive landscape is subtly shifting. Alec Young, Chief Investment Strategist at Mapsignals, notes that until the market is confident Nvidia can maintain its market share and order flow, its valuation multiples will continue to be compressed.

Stucky added, “In the long run, the key to boosting sentiment lies in Jensen Huang’s ability to convincingly argue that Nvidia will continue to dominate the inference market. That’s the core of its long-term thesis.”

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