Seema Shah, chief global strategist at Principal Asset Management, told CNBC on Monday that NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) sits at the center of this week’s market setup, with its upcoming quarterly report positioned as the critical test of whether the AI capital-spending cycle can start showing profitable returns. Nvidia reports fiscal Q2 2027 results on Wednesday, August 26, 2026, after the market closes.
Shah told CNBC that “Both Nvidia earnings and what we’re likely to hear from Chair Powell at Jackson Hole are really key to how the market is going to be moving. But Chair Powell is unlikely to provide any kind of forward guidance on what they’re planning for the September meeting.” That means Nvidia’s guidance could be the market’s biggest catalyst this week.
The AI Trade Has Entered Its “Prove-It” Phase
Shah’s core argument is that investor psychology around AI has shifted. “This is the AI cycle which is maturing. Investors are saying, look, we know what the capex plans are at this stage, but we want to know that that’s actually going to be monetized, that there’s going to be some kind of return on investment.“
She added that “Nvidia is still going to be the foundation for a lot of this AI capex trade. So if we were to see any wobbles there, then unfortunately that could be bad news for the broader market.”
The AI story has also broadened geographically: “This is becoming more of a global story. It’s very interesting, but it’s no longer the one-way trade that it once was.” Shah cited US tech, Asian chip makers, Latin American resources, and European end-use adoption as the widening surface area of the trade.
Nvidia Must Clear a Staggering $91 Billion Bar
Nvidia’s fiscal Q1 2027 earnings report in May saw revenue reach $82 billion, up 85% year-over-year and 20% sequentially, with data center revenue of $75 billion, up 92% year-over-year. Free cash flow was $49 billion, and management pointed to $1 trillion in Blackwell and Rubin revenue from 2025 through calendar 2027.
Guidance for the coming report calls for revenue of $91 billion +/- 2% and non-GAAP gross margin of 75% plus or minus 50 basis points, with no China data center compute revenue included in the outlook. CEO Jensen Huang has argued that “Compute is revenues. Compute is profit” and that “Tokens are now profitable,” positioning Nvidia’s platform as the monetization proof point Shah says investors now demand.
Why Nvidia’s Earnings Could Be the Biggest Event of the Week
Shah noted that rising Treasury yields have not deterred major tech companies from aggressive AI capex plans. The 10-year Treasury yield stood at 4.69% on August 20, 2026, near the period high of 4.75% on July 31, 2026.
Nvidia’s stock reflected some hesitation, trading below $210 and slipping 6.94% over the past week, though shares are still up 12.28% year-to-date.
Prediction Markets Expect a Beat
Prediction markets are pricing high odds of a headline beat. Polymarket assigns a 96.4% probability to Nvidia beating quarterly earnings, 93.5% to non-GAAP gross margin landing between 74% and 76%, and 78.5% to Q2 data center revenue above $85 billion.
Analyst sentiment remains constructive, with an average price target of $304.73 and a forward P/E of 25. Investors want to know the company’s gross margin durability, China commentary, and Rubin timing for evidence that the AI factory buildout is throwing off returns commensurate with the capex Nvidia’s customers have committed. If those signals wobble, the pain could hit the entire market.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks