Nvidia earnings test AI trade after seven-session slide
Nvidia heads into earnings after seven consecutive sessions of declines while holding the 50-day SMA near $207.70. Investors are now assessing whether the company’s powerful cash flow generation can justify continued expansion in AI investment.
Wall Street expects Nvidia to report record quarterly revenue of around $92 billion, making the August 26 results a key test not only for NVDA but for the broader AI trade.
Competition is also intensifying. Bloomberg notes that Nvidia’s largest customers are becoming increasingly active in developing their own accelerators. Amazon says its chip business would already generate more than $25 billion in annual revenue if valued as a standalone operation, while Google and other hyperscalers are also expanding their proprietary AI-chip platforms.
Nvidia tests its 50-day SMA after seven sessions of declines
The scenario outlined in the previous analysis did not play out. Nvidia stock failed to hold key support at $216.50 and continued lower toward the 50-day SMA near $207.70.At the same time, NVDA has now closed lower for seven consecutive trading sessions. Combined with the stock holding its 50-day SMA, this increases the probability of a short-term technical rebound.
The base case for today’s session is therefore a recovery toward the $214–216.50 area.
Short-term traders, however, should account for elevated event risk. Nvidia will report fiscal 2027 second-quarter results on August 26 after the market close. Technical signals may therefore become less reliable ahead of the release as both implied and realized volatility increase.
Cash flow becomes the key earnings test
The main question heading into the August 26 report is whether Nvidia can continue generating enough cash flow to support the scale of investment across the AI ecosystem. With revenue still expanding rapidly, investors will be watching closely to see how consistently Big Tech capex continues to translate into cash generation for Nvidia.Even a strong report would not rule out a sharp post-earnings gap in either direction. Highly leveraged positions therefore carry elevated risk ahead of the release.
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