Nvidia Forecasts $91B Revenue on AI Boom

Nvidia forecasted second-quarter revenue of $91 billion, plus or minus 2%, surpassing Wall Street expectations of $86.84 billion. The company also announced an $80 billion share repurchase program. Traders braced for significant stock movements, with options markets pricing in a 6.5% swing in either direction. Nvidia's shares rose approximately 1.3% in extended trading following the announcement.

The forecast and buyback program highlight Nvidia's strong position in the tech industry, particularly in AI infrastructure. U.S. tech giants are expected to spend more than $700 billion on AI infrastructure by 2026, up from around $400 billion in 2025. This surge in investment underscores the growing importance of AI and its impact on the broader economy.

The market's reaction to Nvidia's forecast reflects the company's consistent performance and investor confidence. Analysts noted that Nvidia has been delivering strong earnings consistently, which is now largely priced into its stock. The announcement also comes amid a backdrop of rising bond yields and inflation concerns, which have driven volatility in global markets.

The Iran war is causing significant supply chain disruptions for the tech industry, particularly impacting the production of semiconductors. Key materials such as helium, bromine, and aluminum are facing shortages due to the conflict. TSMC, which manufactures Nvidia chips, warned that the situation could impact its profitability due to rising prices for chemicals and gases. Foxconn also singled out events in the Middle East as a key challenge this year.

The Senate advanced a resolution to halt action against Iran, indicating increasing political headwinds to the war with Iran. U.S. Vice President JD Vance commented on the progress made in talks between the U.S. and Iran, stating that neither side wants to see a resumption of military conflict. These geopolitical developments add another layer of complexity to the market's current landscape.

The Middle East conflict has pushed oil above $100 a barrel, stoked inflation, dented growth, and forced central banks back toward tightening. Equity markets have been hitting records for months due to three key reasons: earnings growth, valuations, and flows. Global earnings growth expectations stand at 20% for 2026, with technology sector earnings revised up by 2%. AI capex is expected to total nearly $800 billion in 2026 and could rise to as much as $8 trillion by 2030.

The P/E ratio for the S&P 500 has dropped to around 21.5 from pre-conflict highs above 25, largely because earnings growth expectations have risen 6% since the conflict began. The P/E ratio for technology stocks is currently around 25, down from 36 at the end of 2025. Robust earnings and reasonable valuations have kept global investors in a risk-on stance, with flows into global exchange-traded products amounting to $213 billion in April.

The latest quarterly earnings from Big Tech companies, including Nvidia, Alphabet, Apple, Microsoft, Amazon.com, Meta Platforms, and Tesla, have given investors ample reason to stay invested in the AI trade. Despite unprecedented disruptions in the oil markets clouding economic growth outlook, tech stocks regained momentum.

Investors are betting on technology's long-term promise even as they worry over the pace of returns on companies' investments. The hierarchy among these tech giants has shifted at times, with Alphabet briefly coming close to overtaking Nvidia in market value before retreating.