The AI Trade Is Under Pressure to Start the Week. Nvidia’s Results Will Test the Sector

The AI Trade Is Under Pressure to Start the Week. Nvidia’s Results Will Test the Sector

Mon, August 24, 2026 at 5:45 PM GMT+3 2 min read

• NVDA +2.19%

Key Takeaways

• Nvidia's upcoming earnings report could test investor confidence in the AI sector.

• Concerns about the sustainability of AI spending have weighed on Nvidia and other AI-related stocks lately.

The AI trade has hit a few stumbling blocks lately, with the sector facing a key test from Nvidia's earnings later this week.

The AI chipmaker, widely seen as a bellwether for the AI trade, is set to give investors an update on its financials after the closing bell Wednesday. With expectations running high ahead of the event, anything less than robust results could add to the pressure that's held the sector back in recent weeks, Wall Street analysts have warned.

Shares of Nvidia (NVDA), which were down 2% in early trading Monday, are up about 13% for the year but more than 10% off their May highs as worries about an AI bubble and the sustainability of spending on America's AI buildout have weighed on support for the stock, along with others closely tied to the AI boom.

Shares of hard drive maker Sandisk (SNDK), the S&P 500's biggest gainer for the year so far, were down nearly 10% recently, leading the day's declines in the S&P 500 and Nasdaq. Nvidia-backed Lumentum (LITE) and Nebius (NBIS) also lost ground, along with Micron Technology (MU), Seagate Technology (STX) and Western Digital (WDC).

"A simple beat may not be enough. Investors will want another beat-and-raise quarter, but more importantly, confirmation that the massive AI infrastructure spending cycle remains alive and well," Freedom Capital Markets Chief Market Strategist Jay Woods wrote in a note Monday.

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