Nvidia Eyes Perplexity AI as Earnings Approach. How NVDA Stock Investors Should Prepare.

One of the biggest events on the August investment calendar is right around the corner – Nvidia Corporation’s (NVDA) earnings report for its second quarter of fiscal 2027 is scheduled for after the closing bell on Aug. 26. And while plenty of people will be looking at Nvidia's top and bottom lines, I’m more interested in what CEO Jensen Huang will say about the company’s own investments.

Nvidia has been incredibly profitable as it became the world’s leading manufacturer of semiconductors used for training and running artificial intelligence programs. The company’s free cash flow in the last 12 months has been $119 billion, up 54% from a year ago, and its gross margins are nearly 75%. 

That’s allowed Nvidia to make plenty of investments in other companies, and it has stakes in Intel (INTC), CoreWeave (CRWV), Nebius Group (NBIS), Iren (IREN), and more. And now it’s in talks with Perplexity AI as it considers taking a stake that would value the AI startup at $30 billion, an increase from $20 billion last year. Perplexity, which is an AI-powered platform that searches the internet and provides answers with numbered source citations, has seen its annualized revenue increase this year from $250 million to more than $750 million.

While Nvidia’s investments are intended to ensure companies continue to buy their chips, there are also fears that a downturn in the AI and chip markets would hit Nvidia’s balance sheet. And the circular financing arrangements, in which Nvidia’s investments are used to buy Nvidia chips, could artificially inflate the demand for Nvidia’s GPUs.

Huang is sure to have something to say on Nvidia’s investments and partnerships on the company’s earnings call. Let’s see what else investors should expect.

About Nvidia Stock

Nvidia’s GPUs are the key to generative AI and the current evolution of agentic AI. Its chips are bundled by the thousands to process complex calculations, and its next-generation architecture, Vera Rubin, uses NVLink chip-to-chip interconnects so GPUs and central processing units (CPUs) can share memory space and work efficiently.

While the stock has been one of the biggest winners on Wall Street in the last five years, gaining 833%, the last 12 months haven’t been as dynamic. Nvidia shares are up 15.5% - roughly mimicking the performance of the S&P 500 Index ($SPX).

But there’s a tradeoff. Shares are at a historically cheap level, with the forward price-to-earnings Non-GAAP ratio of 23.63 times, compared to its five-year mean of 42.85 times. 

What Should You Expect From Nvidia Earnings?

Nvidia’s own guidance from its fiscal first quarter 2027 earnings report calls for revenue of $91 billion, with gross margins of 75%. Analysts who cover the stock are looking for a little more, with the consensus estimate coming in at $92.18 billion versus $46.74 billion a year ago – essentially sales growth of 97%.

That’s pretty incredible for a company as mature as Nvidia, but it’s in line with how the company has performed in recent quarters. In the fiscal first quarter, Nvidia’s revenue was $81.61 billion, up 85% from a year ago, and net income was $58.32 billion, up 211% from the previous year.

Nvidia’s estimates should be accurate; companies have to place large advance orders with Nvidia for AI hardware months in advance. Major customers such as Amazon.com (AMZN), Alphabet (GOOG) (GOOGL), Meta Platforms (META), and Tesla (TSLA) have committed to spend $760 billion this year on AI infrastructure, with much of that going to chips.

In addition, Nvidia has reportedly informed its customers about upcoming 15% price increases for chips.

Is Nvidia Stock a Buy Now?

Nvidia is a closely covered company in the investment community, but the sentiment surrounding the stock is nearly unanimous. Of 48 analysts following Nvidia, 46 of them have “Buy” ratings, with one suggesting investors sell and one with a “Hold” rating. The consensus price target of $307.38 suggests potential upside of 46.2%.

Nvidia’s revenue, profits, and free cash flow are impressive, and its valuation is exceptionally reasonable for a company that is expected to see growth better than 90%. Investors can expect another strong report from Nvidia when it reports earnings Aug. 26.