Unveiling the Impressive Group of Ten Stocks Known as the "Ten Titans," Boasting a 7.5% Inclusion in the S&P 500, They Potentially Hold the Power to Shape the Stock Market on August 28 Alone
Nvidia (NVDA), the tech giant known for its significant contributions to the S&P 500, is set to release its second-quarter fiscal 2026 earnings report on August 27, after market close. The company's unprecedented earnings growth over the last three years has made it a favourite among investors, with its stock price rising after earnings reports 75% of the time.
Investors are particularly interested in the capex-to-revenue metric, as it provides a reading on where we are in the AI spending cycle. The capex-to-revenue ratio for cloud computing hyperscalers shows accelerated investment in AI, but it should decrease if investments translate to higher revenue.
Nvidia's diluted earnings per share (EPS) for the trailing-12-month period stands at $3.10. The company's earnings growth has been impressive, with its net income increasing from $5.96 billion to $76.8 billion over the same period.
Analyst consensus estimates call for 37.8% in earnings growth in fiscal 2027, which would bring Nvidia's diluted EPS to $6 per share. This growth has led analysts to adjust their price targets to keep up with Nvidia's growth, and near-term forecasts are ambitious.
Nvidia's revenue primarily comes from selling graphics processing units, software, and associated infrastructure to data centers. Interestingly, most of this revenue comes from just a handful of customers, with the four largest accounting for 54% of Nvidia's revenue in the first quarter of fiscal year 2026. These customers are believed to be Amazon, Microsoft, Alphabet, and Meta Platforms.
The S&P 500 and Nasdaq Composite are currently near all-time highs, and the rally is attributed to investor excitement for AI-driven growth and potential interest rate cuts by the Federal Reserve. Nvidia, with its 7.5% weighting in the S&P 500, makes it the largest of the Ten Titans, which collectively make up 38% of the S&P 500. The other Ten Titans are Microsoft, Apple, Amazon, Alphabet, Meta Platforms, Broadcom, Tesla, Oracle, and Netflix.
Given Nvidia's heavy dependence on sustained AI investment, it is best to approach the company with a long-term investment time horizon. Based on Nvidia's current outstanding share count, this would translate to net income of $107.7 billion in fiscal 2026 and $148.5 billion in fiscal 2027.
Analyst consensus estimates predict Nvidia to bring in $1 per share in earnings for the quarter it reports on Wednesday and $4.35 for fiscal 2026. With Nvidia's impressive track record and the promising outlook for AI-driven growth, the anticipation for the upcoming earnings report is palpable.
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