Nvidia's Seven-Day Slide Tests AI Trade

Nvidia fell for seven straight days ahead of earnings as market valuations near dot-com bubble.

According to CNBC, Nvidia has been down seven straight days ahead of its Wednesday earnings report, with the decline attributed to what Jim Cramer described as "worries on data center slowdowns." The Motley Fool reports that Nvidia, the world's largest company by market capitalization at $5.2 trillion, closed at $208.48, down 2.91% on the session. With a 7.3% weighting in the S&P 500, Nvidia's extended slide carries implications well beyond a single stock. CNBC notes that 90% of Nvidia's revenues are now tied to the data center industry, according to data provider Quartr, making the company's trajectory a bellwether for the broader AI infrastructure theme.

The Motley Fool describes Nvidia as the company at the center of the artificial intelligence trade, providing the bulk of graphics processing units and central processing units that power AI applications. If the AI trade faltens, most of the market could suffer as well, the publication cautions. CNBC reports that Cramer acknowledged it is acceptable to sell some stocks with data center exposure but called it a growth area that commands attention. Nvidia is up approximately 1,200% since Cramer last bought shares in 2022, CNBC adds. The Motley Fool also notes that Nvidia recently committed $105 billion to help OpenAI fund and build a new data center in Ohio capable of delivering 4.2 gigawatts of AI compute, underscoring how deeply the company is entwined with the industry's growth.

After the market closes on Aug. 26, Nvidia will report second-quarter fiscal 2027 results followed by a conference call with CEO Jensen Huang and Wall Street analysts, according to The Motley Fool. Wall Street analysts expect $92.07 billion in adjusted revenue, representing nearly 97% year-over-year growth, and adjusted earnings per share of $2.09, roughly double the prior-year quarter. The Motley Fool, citing MarketWatch, reports that boutique investment firm BeSpoke called Nvidia a "triple-play king" for regularly beating consensus on earnings, revenue, and forward guidance—accomplishing this in 14 of its last 20 earnings reports. Simply beating estimates may no longer be enough to move the stock higher. Investors will also watch for gross margins in the mid-70s percentile and demand signals for Nvidia's advanced Vera Rubin GPU and its newly launched CPU built for agentic AI.

According to The Globe and Mail, the S&P 500's Shiller Price-to-Earnings Ratio reached approximately 42 as of Aug. 21, approaching the dot-com bubble peak of 44.19 reached in December 1999. The publication reports that the Shiller P/E has surpassed 30 only six times over nearly 156 years, and the previous five occurrences all ended with the Dow, S&P 500, or Nasdaq Composite losing between 20% and 89% of their value. Additionally, outstanding margin debt surged 77% to a record $1.502 trillion between April 2025 and June 2026, according to FINRA data cited by The Globe and Mail. Every prior instance of rapid margin debt expansion—before the dot-com bust, the 2008 financial crisis, and the 2022 bear market—was followed by a major market downturn.

Simply Wall Street reports that S&P 500 and Nasdaq 100 futures edged lower as investors absorbed stronger services data and shifting interest rate expectations. The August US services PMI sat at 56.8, signaling solid activity, while input costs remain elevated, the publication notes. The 10-year Treasury yield eased to 4.71% ahead of the July PCE inflation report. According to Eurasia Business News, technology stocks led the decline, with Nasdaq futures falling 1.14% compared with a 0.26% drop in S&P 500 futures, as elevated long-term interest rates pressure high-growth technology valuations. The 30-year Treasury yield recently exceeded 5.3%, its highest level in nearly two decades, Eurasia Business News adds, increasing borrowing costs and reducing the present value of future corporate profits.

Nvidia's earnings on Wednesday will be closely watched as a sector reference point, according to Simply Wall Street. Eurasia Business News reports that Nvidia's results could influence the entire AI investment theme—strong sales and optimistic guidance may restore confidence after last week's technology selloff, while weaker guidance could intensify concerns about slowing demand and stretched valuations. Marvell Technology is scheduled to report Thursday, providing an additional read on custom-chip and networking demand, Eurasia Business News adds. The July PCE inflation data will also shape Federal Reserve expectations and keep rate-sensitive sectors in the spotlight, Simply Wall Street notes.