Eyes are on Nvidia (NASDAQ:NVDA) as Wall Street anticipates its quarterly earnings report slated for Wednesday. After a spectacular 1,000% increase from late 2022 through 2024, Nvidia’s shares have slightly declined by 2% year-to-date. Rising long-term U.S. Treasury yields, particularly in the 30-year notes which recently surpassed 5%, are weighing on investor sentiment as they try to balance AI chips momentum against fiscal policy risks.

Nvidia’s Market Impact

• Leader in AI Technology: According to Chuck Carlson of Horizon Investment Services, Nvidia holds a central position in the AI sector, driving market trends significantly.

• Influence on Major Indices: Given Nvidia’s substantial presence in key benchmarks, its performance can greatly influence Nasdaq and S&P 500 futures.

Key Metrics to Monitor

• Earnings Date & Estimates: Nvidia is set to reveal earnings on Wednesday, with a consensus EPS of $5.12 and revenue anticipated at $26.8 billion.

• Historical Performance: Historically, Nvidia has shown an aptitude for exceeding EPS estimates, averaging a 9% beat during the past eight quarters.

Fiscal Policy Challenges

Investor concerns are escalating as Congress debates tax reductions and expenditures that could add trillions to the existing national debt. Rising deficits could drive long-term yields higher, consequently increasing borrowing costs for tech companies and potentially squeezing profit margins.

The combined state of high AI demand and rising funding costs will determine Nvidia’s capacity to deliver growth during this economically challenging period.