AI Rally Hangs in the Balance as Tariffs Cast Doubt on Nvidia

Published: May 28, 2025 by Omor IE

Key Points

Nvidia is about to release its earnings figures today.
Investors are anxious, as this could make or break the AI rally.
The stock market has declined slightly ahead of Nvidia’s report.
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Nvidia’s (NASDAQ: NVDA) earnings release later today could make or break the AI rally. Investors are anxious ahead of the release since recent trade policy changes have been abrupt, and Nvidia already reported a $5.5 billion charge tied to H20 China restrictions. Many believe that China-related losses could be offset by demand elsewhere, especially since Blackwell chips are sold out for the year.

On the other hand, things are not looking up for the rest of the market at the moment. Only the S&P 500 Communication Services sector is up. Every other S&P 500 sector is down, with the S&P 500 Utilities sector being down the sharpest. Investors seem to be waiting for Nvidia’s earnings before making a major entry or exit.

Here’s a market update as of 11:30 AM (ET) today.

The S&P 500 is down 15.87 points, or 0.27%.
The Nasdaq Composite is down 20.4 points, or 0.1%.
The Dow Jones Industrial Average is down 128.18 points, or 0.3%.

Nvidia Will Decide Where This AI Rally Will Go

Analysts expect Nvidia to post $43.3 billion in revenue and $0.93 in EPS. However, some analysts don’t think that will happen due to China-related restrictions. Piper Sandler has its worst-case scenario dragging NVDA stock down to $77.

At the same time, you should keep in mind that Nvidia has beaten analyst estimates for ten quarters straight and has proven its naysayers wrong every single time. This time could truly be different, though, since China constitutes a fifth of the market or more if you take into account China-related revenue from Singapore and elsewhere. On top of export restrictions, Huawei is making chips that are comparable to or almost on par with those of Nvidia now. This could eat into Nvidia’s future growth and is already hurting sentiment.

If Nvidia fails to deliver, it will be a bad day not just for Nvidia, but for the rest of the AI pack. Almost all semiconductor stocks could rally or slump in tandem, depending on how things turn out with Nvidia later today.

Notable Losers Today

Tempus AI (NASDAQ: TEM) is down 15.5% after Spruce Point Capital issued a short-seller report.
Okta (NASDAQ: OKTA) is down 13.9% after earnings and revenue beat estimates. Guidance disappointed analysts. Okta expects $711 million in revenue at the midpoint of its guidance, and while this is above estimates of $709 million, analysts expected Okta to raise its guidance.
Photronics (NASDAQ: PLAB) is down 13.2% after an earnings miss. It posted EPS of $0.4 vs. analyst expectations of $0.48. Its CEO has also stepped down, and a board member has assumed the additional role of CEO.
Pony AI (NASDAQ: PONY) is down 12.5%. It is up 80.8% in the past month, so investors are likely de-risking.
AMC Entertainment (NYSE: AMC) is down 12% after a 51% May rally.

Notable Gainers Today

LiveWire Group (NYSE: LVWR) is up 43.2% for technical reasons.
Monro (NASDAQ: MNRO) is up 34.5% after exceeding Q1 revenue expectations.
Joby Aviation (NYSE: JOBY) is up 27.8% after a $250 million investment from Toyota (NYSE: TM).
Abercrombie & Fitch Co (NYSE: ANF) is up 17.7% after beating sales expectations.
Box (NYSE: BOX) is up 17.3% after it posted strong sales guidance at $290.5 million at its midpoint vs. the $284 million expected by analysts.