Nvidia reports earnings on Wednesday – and the timing couldn’t be more awkward. OpenAI’s Sam Altman just warned that investors diving into AI without doing the math could get “very burnt”. Then came an MIT study saying that although companies have rushed to adopt AI, most have nothing to show for it. Pretty grim. So Nvidia’s stock dipped just last week, and the broader tech sector looked shaky too – until later in the week anyway, when the Federal Reserve chair suggested that a September interest rate cut is by no means out of the question. Now, not to sound overly dramatic about things, but Nvidia’s update could reveal exactly how investors feel about the whole AI trade.

Nvidia now accounts for nearly 8% of the S&P 500. And that makes this AI stock a mood board of risk appetite, too. And sure, the chipmaker’s been beating expectations every quarter since the start of the AI boom, but those “beats” have been getting slimmer and slimmer – down to 2.2% recently, from 5.8% last year. At the same time, the options market is pricing in a swing of plus or minus 7% or 8%, which tells you how jumpy investors are. So yeah, the expectations are at the ceiling, and the room for disappointment is… let’s just say, spacious.

Here’s what to watch when the earnings report drops: Blackwell, China, margins, and hyperscaler spending.

– Blackwell chips are Nvidia’s next big thing, with demand strong enough to account for 80% of high-end graphics processing unit (GPU) shipments this year. Its performance could be up to 40x better than its Hopper predecessor. Now, supply’s still tight, but that should ease before the end of the year, which could lift margins.

– China’s a wildcard: US export bans may have cost Nvidia $8 billion in second-quarter sales. And though the firm’s planning to release a regulation-friendly Blackwell chip next month, that might not save the day. New US export curbs are still possible, China is boosting its support for domestic rivals like Huawei and Cambricon, and Chinese firms like DeepSeek are optimizing for chips made at home.

– Margins dropped to 60.5% in the first quarter, but they could bounce back toward 75% if Blackwell ramps smoothly.

– And hyperscaler capex – the big-budget AI infrastructure spending from the likes of Microsoft and Amazon – is forecast to hit $335 billion next year. If that stumbles – even a little – Nvidia’s growth story (and the whole AI trade) may start to seem a bit unstable.