Nvidia, the world’s largest publicly traded company, is set to report its Q1 2026 earnings after U.S. markets close on Wednesday, with expectations for revenue around $78.8 billion and EPS of $1.75, reflecting significant year-over-year growth. However, the market’s confidence is wavering amid rising bond yields and concerns over capital expenditure (CAPEX) from its primary customers, including Microsoft and Amazon, which could impact Nvidia’s profitability.

While Nvidia remains a dominant player in the AI and semiconductor sectors, signs indicate that its explosive growth phase may be slowing. Key metrics such as return on invested capital (ROIC) have declined from a peak of 95% to 78.9%, and the weighted average cost of capital (WACC) has risen significantly, suggesting tightening financial conditions. This backdrop raises questions about Nvidia’s ability to sustain its high valuation without new growth avenues or optimistic guidance.

Market professionals should monitor Nvidia’s upcoming results closely, as they may not only reflect the company’s performance but also serve as a litmus test for broader market sentiment regarding tech valuations and CAPEX trends in the AI sector.

Source: xtb.com