Despite a recent rebound in technology stocks, mega-cap names like Alphabet (GOOG, GOOGL), Amazon (AMZN), and Microsoft (MSFT) have all seen shares fall over the last month as investors question the staying power of artificial intelligence.

Shares of Google parent Alphabet have dropped 14% while Amazon shares are off about 8%. Microsoft stock has fallen more than 7% as of Thursday's close. But Nvidia earnings, due later this month, could be the next big catalyst for Big Tech and the AI trade overall.

Yahoo Finance's Dan Howley reports:

The chip company’s performance could turn around the AI trade more than any hyperscaler. Unlike those software firms, revenue hasn’t been a problem for Nvidia. Still, if it falls short of Wall Street’s already sky-high expectations, it could bring the AI trend down with it.

Alphabet, Amazon, and Microsoft’s AI spending might be giving investors pause, but it’s helping pad Nvidia’s bottom line. The company’s Hopper AI chips are the most sought-after on the market, and the firm is set to begin ramping up production of its Blackwell line later this year.

The company controls 80% to 95% of the market for high-powered AI chips, according to Reuters. That means every time a company says it's spending on AI capabilities, chances are it’s buying up, or at least using, Nvidia’s processors.

But Nvidia’s second quarter report also marks the start of what will be several quarters of difficult year-over-year revenue growth comparisons. The company’s fiscal Q2 2024 revenue came in at $13.5 billion, up 101% year over year. Data center revenue topped $10.3 billion, up 141%.

Each subsequent quarter has seen ever more impressive year-over-year gains for the chip giant. But that party won’t last forever. In its most recent quarter, Nvidia reported revenue of $26 billion, a 262% increase from the $7.19 billion the company reported in the prior year.

For its upcoming second quarter report, Wall Street analysts are anticipating revenue of $28.6 billion, a 112% year-over-year jump. And while that still represents an enormous increase in revenue, it’s not as staggering as the growth the company has seen in its previous quarters. And that could turn off some investors.

That’s not to say Nvidia isn’t expected to continue raking in cash, or that Wall Street is down on the company. As of Thursday, 66 analysts had Buy ratings on Nvidia’s stock. Just seven had Hold ratings and only one had a Sell rating.

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