The day is finally here: You all can get out your Nvidia foam fingers and Jensen Huang cardboard cutouts.

We’ve been writing about Q2 earnings for weeks…but you all have been tuning us out until you hear the magic word: “Nvidia.” The $3 trillion chipmaker reports its second-quarter earnings after the market closes today, aka the Super Bowl for investors.

It’s an overused but appropriate metaphor. Nvidia now accounts for more than 6% of the S&P 500’s weighting and is a bellwether for generative AI demand, which has underpinned the broader market’s rally. The chipmaker’s stock is up an astonishing 2,877% over the past five years and 159% year to date.

What is Wall Street forecasting?

• Revenue: $28.7 billion, up 110% from $13.5 billion last year.
• Data center revenue (a key indicator of spending on its AI chips): $22.6 billion, more than double last year.
• Earnings per share: 65 cents, up 140% from 27 cents a year ago.
• Net income: $14.95 billion. You know the drill…that would also be more than double last year.

If you need any more convincing of today’s gravity, just read the restrained and blasé outlook from Wedbush analyst Dan Ives: “There is one company in the world that is the foundation for the AI Revolution....and that is Nvidia with the Godfather of AI Jensen,” he said in note. “In a nutshell, we expect another drop-the-mic performance from Nvidia as right now Jensen & Co. are the only game in town with $1 trillion of AI Cap-Ex on the way for the next few years with Nvidia's GPUs the new oil and gold in this world.” No pressure!

What should you look out for?

Investors want confirmation that Nvidia can keep growing at a breakneck pace amid heightened competition from firms like Advanced Micro Devices and TSMC. They’ll also want to know more about the production status of Nvidia’s new Blackwell chips. The Information reported that Nvidia’s production of the uber powerful chip was delayed earlier this month, sending Nvidia shares lower (but not for long).

While analysts expect another stellar performance from Nvidia, the bar has been set so high that any slight indication of weakening demand is sure to send Wall Street into a tailspin. A 10% move is projected in either direction after the announcement, equivalent to roughly $310 billion in market value.

The hype is real, but investors should avoid overexposure to one sector. “Investors with low existing AI holdings should create a plan to build up long-term exposure to the theme,” explained Solita Marcelli, CIO at UBS Americas, in a note today. But on the other hand, “Investors with a high allocation may consider capital preservation strategies as a hedge.”

But thinking about balance is for tomorrow. Tonight, catch us at the Nvidia watch party. —LB

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🟢 What’s up

• Chewy gained 11.06% today as profits at the online pet supplies retailer surged last quarter, easily beating projections.
• Ambarella, a semiconductor company, jumped 10.63% after topping Q2 revenue estimates.
• Box rose 10.83% with the cloud company upping its sales outlook for the year.
• AeroVironment was up 9.06% after the defense firm secured a $990 million five-year contract with the US Army.

What’s down

• Super Micro Computer plunged 19.02% after announcing it would delay filing its annual financial disclosures with the SEC. Yesterday, short-seller Hindenburg Research accused the high-flying server maker of “glaring accounting red flags” and other sketchy business practices.
• Abercrombie & Fitch’s 21% revenue growth last quarter wasn’t enough to impress investors, who sent the retailer’s stock down 16.99%. They got spooked when CFO Fran Horowitz mentioned the “increasingly uncertain environment” in the second half of the year.
• Trump Media stock dipped below $20/share for the first time since the Truth Social owner went public in March. It’s down more than 75% from its intraday peak set that month.
• Foot Locker beat top and bottom line estimates for the second quarter. But its stock dropped 10.24% when it kept its full-year outlook steady and announced store closures in Asia and Europe.

Warren Buffett isn’t letting the Magnificent Seven hog the spotlight any longer.

The legendary investor’s holdings company, Berkshire Hathaway, hit a $1 trillion market cap today—the first non-tech US company to reach that milestone.

Berkshire’s shares have gained 28% this year partially due to its strong second-quarter earnings, outrunning the S&P 500’s YTD gain of 18%.

How we got here: In the 1960s, Buffett took over a modest textile business and turned Berkshire into what is now the biggest and among the only remaining conglomerate investment firms.

While the conglomerate investment model has fallen out of fashion in recent decades, Buffett’s investment thesis of prioritizing value (he owns names like Bank of America and Coca-Cola), over flashy growth stocks has proven successful. But tech has certainly given Berkshire a boost: its biggest holding is Apple, which makes up nearly 30% of Berkshire’s portfolio. His stake of the tech firm is valued at $90.9 billion.

Cashing in

Recently, Buffett has been trimming his stakes in some of his historical favorites. Yesterday, Berkshire disclosed that it further shrunk its stake in Bank of America by about 24.6 million shares worth $982 million, on the heels of dumping about $5 billion of the stock earlier this summer.

Near the end of June, Berkshire’s cash holdings grew to a record $277 billion after selling about half of its Apple stake.

Buffett maintains he does not time the market, but many investors saw his dumping of equities as a warning sign for the economy.

Either way, investors seem to feel that in good times and bad, standing behind Buffett is a safe, $1 trillion bet.—LB

This seems backward: At least one crypto mining company in Texas has been making a lot more money from stopping mining than from creating any new bitcoins.

According to The Economist, bitcoin miner Riot Platforms (RIOT) made $32 million from hitting pause on mining in August 2023, while it made just $8.6 million from selling bitcoin in the same month.

How does that work? In Texas, the bitcoin mining capital of the USA, bitcoin miners are paid by the state to switch off their power-hungry computers and conserve electricity during periods when the grid is under strain. They can also sell their power back to providers at a profit.

Critics of bitcoin miners call this scheme an energy arbitrage business in all but name and accuse companies like Riot of squandering taxpayer money. Advocates of the industry respond that miners can act as effective “dimmer switches” to help Texas’s grid stay online when everyone is cranking the A/C.

Bottom line: After rolling out the red carpet for crypto miners, (perhaps regretful) Texas lawmakers have increasingly attacked the industry for gobbling up power supplies.

• Mortgage rates fell to a 16-month low, per the Mortgage Bankers Association. The average contract rate on a 30-year fixed-fresh mortgage was 6.44% last week.
• The billionaire founders of hedge fund giant Two Sigma, Jon Overdeck and David Siegel, are stepping down as co-CEOs. They’d been bickering for years over the direction of the $60 billion quant firm.
• The number of 401(k) millionaires hit a fresh record high in Q2, per Fidelity Investments. 497,000 accounts had balances of at least $1 million, and the average balance was nearly $1.6 million.
• A former broker was fined $5,000 by Finra for allegedly hyping up certain stocks to at least 20 clients. The regulator requires that brokers’ communications with clients be “fair and balanced.”
• Earnings after the bell today (besides Nvidia): Salesforce, CrowdStrike, and Affirm.

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While tomorrow’s market moves will surely be dictated by whatever happens with Nvidia earnings this afternoon, we’ll also receive some data reports shedding light on the state of the economy.

Initial jobless claims, out at 8:30am ET, offers the first look at the labor market after Jerome Powell teed up a September rate cut in Jackson Hole. In that speech, Powell said, “We don’t have a crisis in labor markets. The way I describe them is they’re weakening, but they’re not weak.”

Also at 8:30am, the government will release revisions to second-quarter GDP. In the initial reading last month, economic growth jumped 2.8% in Q2, greater than expected.

• Before the open: Campbell Soup Company, Best Buy, and Birkenstock
• After the close: Dell, Lululemon, and Ulta Beauty (Warren Buffett’s most recent stock pick)