Nvidia has a lot to prove when reporting its highly anticipated Q1 earnings today after the bell—and not just to itself. As the largest US company by market capitalization and the undisputed king of the chip market, Nvidia has become synonymous with the startling, rapid ascension of the AI trade.

It’s hard to overstate the company’s influence, especially at this very moment: CEO Jensen Huang just returned from a trip to China with President Trump, and Nvidia shares hit another record high last week. But with success comes mounting pressure: One underwhelming line item in today’s report could send the entire AI trade into a downward spiral.

Nvidia shares were up 1.3% at the end of the day, in anticipation of the latest numbers.

Kingvidia’s challenges

This quarter is also a pivotal one for the chipmaker, as it fends off increased competition in the semiconductor market. Nvidia’s 19.82% gain this year, while handily beating the S&P 500’s 8.58% increase, lags behind other AI heavyweights. Intel, for example, has gained 222.38% this year, Micron jumped 156.47% over the same period, and AMD surged 108.99%.

Then again, those strong gains have made investors anxious that semi stocks are running out of room to run higher. Those three competitors have all sold off in the days ahead of Nvidia’s earnings report as traders lock in profits—they’re fretting about whether the AI trade can endure the higher interest rates everyone is suddenly anticipating.

It doesn’t help that since AI is a large part of the market’s recent rally, investors are wary that broadly diversified indexes like the S&P 500 aren’t actually that diversified anymore. Forget the Mag 7: Chipmakers alone now account for roughly 19% of the market cap of the S&P 500, their highest percentage ever, according to the Wall Street Journal.

The question is whether AI hardware stocks can continue to buoy a market facing headwinds like the fallout from the Iran war, waning consumer sentiment, and steadily accelerating inflation. And Nvidia is, once again, the trendsetter—precisely when it seems to be trailing the competition.

What else to watch: Investors will be closely scrutinizing any news CEO Jensen Huang discloses from his trip to China, how Nvidia’s supply chain is holding up amid the massive datacenter buildout, and how the company will handle competition from rivals, like Alphabet’s TPU chips eating into Nvidia’s market share.

Let’s hope Jensen is wearing his lucky leather jacket.—LB

🟢 What’s up

• Roivant Sciences surged 14.89%, while its subsidiary Immunovant jumped 35.26%, after a clinical trial for its rheumatoid arthritis drug showed positive results.
• GameStop gained 2.04% after it revealed it bought more eBay options, pushing shares of the online auction site 4.13% higher as well.
• Astera Labs rose 17.69% due to confident commentary at a tech conference amid investor excitement about the semiconductor industry.
• United Airlines surged 9.99%, Delta soared 9.39%, Carnival jumped 8.96%, and Norwegian Cruise Line rose 8.42%, thanks to a dip in oil prices following reports that three supertankers were travelling through the Strait of Hormuz.
• Toll Brothers added 9.92% today after beating top and bottom line earnings expectations.

What’s down

• Hasbro fell 8.83% after the toymaker warned it would not yet be able to raise its guidance for the second half of the year.
• Analog Devices sank 3.92% after reporting that free cash flow in Q2 decreased roughly 33% from a year ago.
• Keysight Technologies fell 0.59%, despite reporting its strongest quarter ever yesterday after the bell.
• Reddit sank 5.27% on the heels of CEO Steve Huffman selling roughly $2.8 million worth of shares last week.

Remember how in Back to the Future Part II Biff uses the sports almanac to win a bunch of money betting on sure things? This is like that, just with fewer hoverboards.

According to the Wall Street Journal, the CFTC is kicking off an investigation into trades of over $800 million worth of US and international oil futures made just before President Trump suspended attacks against Iran on March 23. The President announced the pause via social media that morning, and investigators will seek to ascertain if the parties that profited from their unusually well-timed bets made them just a few minutes before the President’s post.

It’s not the first time someone has made a quick buck by presciently predicting the President’s next move, but the March 23 incident is the most lucrative—and most glaring—example. It also comes amid a flurry of what appears to be insider trades made on prediction markets like Kalshi and Polymarket by people closely related to the events they’re betting on.

Some of the most well-covered examples include political staffers using poll numbers to bet on their candidates, or a US Army special forces master sergeant who participated in the capture of Venezuelan President Nicolás Maduro winning $40,000 on Polymarket for…predicting the capture of Venezuelan President Nicolás Maduro.

Those instances have put prediction markets under fire recently, with users worried they’re being set up to lose to bettors with inside info, while politicians are increasingly calling for tighter regulations. But if the CFTC does find there to be wrongdoing directly connected to the President’s policy decisions, it could become a much more serious matter than that time a guy used a hairdryer on a weathervane to win a couple of bucks.—MR

After years of slumping sales, Target finally hit the earnings bullseye. The retailer reported a 5.6% jump in comparable store sales in Q1—triple what Wall Street was anticipating, and the first positive gain in five quarters straight.

The struggling retail chain surpassed forecasts on both the top and bottom lines, thanks to its secret weapon: cheap trinkets like toys under $10, and buzzy brand collabs with Roller Rabbit, whose exclusive prints and blind boxes generated roughly $6 million in sales in their first hour alone. Even grander plans are slated for Q2, including the debut of Target Beauty Studios in 600 stores, an overhaul of home decor accessories, and the biggest food and beverage makeover in more than a decade, featuring zingers like mushroom coffee.

Target also raised its full-year guidance, boosting year over year expected net sales growth from 2% to 4%, and pushing EPS to the high end of its previous forecast range of $7.50 to $8.50.

“We’re encouraged to see a strong guest response so far,” reported CEO Michael Fiddelke, who took the helm in March. Still, he’s not running a victory lap down store aisles just yet: “Despite our updated guidance, we’re maintaining a cautious outlook given the work we know we have in front of us and ongoing uncertainty in the macroeconomic environment.”

Shoppers vs. shareholders

Target may be winning over shoppers, but shareholders not so much.

The stock dropped 3.84% today, due to concerns over rising marketing, operations, and compensation costs. Plus, as CFO Jim Lee pointed out, part of the reason this quarter’s numbers look so good is because they were so bad last year, which won’t be as easy to keep up going forward.

Another stormcloud gathering on the horizon is consumer sentiment, which fell to a new record low in May amid surging inflation and soaring gas prices. How much longer will shoppers be eager to indulge in retail therapy if it costs twenty bucks to drive to the mall?

Consumer spending fuels two-thirds of the country’s GDP, making it the closest thing we have to a real-time pulse check on how Americans feel about their jobs, their savings, and what they think is coming next. In this sense, Target’s comeback story isn’t just about a struggling store. It’s a canary in the coal mine to a bigger question: Are we all okay?

We’ll get an even clearer answer once Walmart reports earnings tomorrow.—JD

• Meta Platforms has begun sweeping layoffs to help pay for its massive AI spending.
• Jeff Bezos called SpaceX’s two-to-three-year timeline for datacenters in space a “little ambitious.”
• The House of Representatives approved a housing affordability bill that limits big investors from buying single-family homes.
• Samsung Electronics reached a last-minute deal with its labor union, averting a major strike.
• OpenAI is reportedly getting ready to file for an IPO as soon as Friday.
• The JPMorgan investment banker accused of sexual assault in a viral lawsuit countersued for defamation, saying the allegations “ruined her life.”

Economic announcements: Keep an eye out for the weekly initial jobless claims report and the monthly housing starts and building permits report, plus S&P Global delivers both the flash services and manufacturing PMI reports.

Earnings reports: We’ll hear from Walmart, Deere & Co., Generali, Ross Stores, Take-Two, Zoom, Workday, Webull, Deckers Outdoor, Nio, and BJ’s.

Everything else: Tune in to The Late Show for the final episode of its 33-year run.