Nvidia (NVDA) shares rose in afternoon trading Tuesday as market participants waited impatiently for what some analysts called the company’s “most important technology earnings in years.”

Nvidia, the artificial intelligence chipmaker at the center of the AI ​​revolution, is expected to report its second-quarter fiscal 2025 results after the market closes on Wednesday. It will be Nvidia’s third earnings report this calendar year, and investors are waiting to see if this will be the third time the stock has hit new highs on the back of stunning results.

On May 23, a day after the chipmaker reported record quarterly sales and profits and announced a 10-for-1 stock split, shares rose more than 9 percent. In the following two weeks, they rose more than 27 percent.

The company’s fourth-quarter fiscal 2024 results were even more explosive. Shares rose 16% in one day, pushing the company’s market capitalization to a record $272 billion. By the end of the week, Nvidia’s market value had increased by more than $300 billion, and within two weeks, shares had risen more than 30%.

But stellar results aren’t always enough for Wall Street. Nvidia shares fell in late November 2023 as concerns about restrictions on exports of advanced semiconductors to China overshadowed quarterly revenue that beat Wall Street estimates by nearly $2 billion.

Nvidia shares have been battling headwinds lately

The stock, which has seemed unstoppable for much of the past two years, has stumbled in recent months. Shares fell more than 25 percent in July and early August as expectations of lower interest rates sparked a broad shift out of mega-cap technology stocks into rate-sensitive small caps and then triggered the unwinding of the popular yen carry trade.

Concerns about excessive spending on AI infrastructure also weighed on tech stocks in the recent earnings cycle. Although Nvidia stock benefited from all this spending, it felt some of the impact of Wall Street’s waning AI optimism.

The company also recently had to deal with reports that design flaws could delay the release of the next Blackwell chip. That news sent shares crashing earlier this month, but investors bought in and the stock has since recovered.

High expectations are a risk, says Morgan Stanley

Morgan Stanley analysts said in a note Sunday that they believe Wall Street has overreacted to the Blackwell delays. They did not expect the delays to change the system’s rollout timeline, nor did they expect them to have a material impact on quarterly results.

Given strong demand for the Blackwell system and the fact that older offerings are filling supply gaps, executives may not even acknowledge tactical setbacks, analysts say.

The biggest risk to Nvidia stock, they say, is rising investor expectations. Earnings from hyperscaler and AI server maker Super Micro Computer (SMCI) point to massive spending on data centers, which has prompted some to raise their revenue forecasts for the rest of the year.

Morgan Stanley believes that to satisfy its investors, Nvidia needs to announce fiscal third-quarter revenue guidance that is about $2 billion above the consensus analyst view. “Assuming all goes well with new products, we think the guidance for the stock needs to remain unchanged in the $33-34 (billion) range.”

A value of this magnitude would mean a significant acceleration in sales growth compared to the previous quarter.

Analysts expect Nvidia to report second-quarter revenue of $28.84 billion, according to consensus estimates from Visible Alpha. That would be about 11 percent more than the first quarter. If Nvidia meets those expectations, revenue would have to rise 18 percent in the quarter to reach the top end of the range.