Nvidia (NASDAQ:NVDA) heads into its fiscal second-quarter earnings report on Wednesday after a five-session losing streak, with investors weighing a reported move to expand its stake in AI search startup Perplexity. The stock closed Friday at $214.72, down roughly 5% from the prior Monday's close, as rising Treasury yields and renewed skepticism about the AI trade pressured semiconductor shares.
The Perplexity discussions, reported by The Information, signal that Nvidia continues to deploy capital across the AI ecosystem even as shareholders seek clearer evidence that such investments will translate into sustained chip demand. A deal could value Perplexity at more than $30 billion, a 50% premium over its previous $20 billion valuation, and would deepen a relationship that already includes Nvidia's Nemotron Coalition collaboration.
Perplexity talks underscore AI ecosystem strategy
Perplexity's annualized revenue has climbed to over $750 million from less than $250 million at the start of 2026, driven by its Perplexity Computer AI agent, according to The Information. Nvidia is already an investor in the startup, and the potential equity round would extend its pattern of backing companies that rely on or expand demand for its computing platforms.
The report notes that Nvidia had earlier considered a technology-licensing and hiring arrangement with Perplexity before shifting toward a conventional equity investment. While the financial terms remain undisclosed, the move would reinforce Nvidia's position across the AI stack, from chips to software to applications.
Earnings expectations set a high bar
Despite the strategic interest in Perplexity, Wednesday's earnings report is likely to have a far greater impact on Nvidia's stock. Wall Street expects fiscal second-quarter revenue of approximately $92.1 billion and adjusted earnings of $2.09 per share, according to consensus estimates. That would mark another quarter of exceptional growth, but expectations are already elevated.
Nvidia shares have barely advanced since its last earnings report despite continued profit growth, and options markets are pricing a move of roughly 5.3% around the results. Investors will focus on Blackwell demand, the Vera Rubin ramp, China sales, and whether rising component costs pressure gross margins. They will also seek more detail on Nvidia's financing commitments across AI infrastructure, a topic that has drawn scrutiny from analysts.
Wall Street remains bullish, but execution is key
Analyst sentiment stays positive. Bank of America's Vivek Arya sees Nvidia's valuation as attractive despite vendor-financing concerns and maintains a $350 price target. He argues the market may be overemphasizing financing risks relative to Nvidia's free-cash-flow potential. BMO Capital initiated coverage with an Outperform rating and a $340 target, citing strong demand and capacity already committed for more than 12 months.
TipRanks data shows a broader Wall Street consensus target near $302, implying roughly 40% upside from Friday's close. That leaves the Nvidia stock outlook bullish but highly dependent on execution. A Perplexity investment would strengthen the company's position across the AI stack, but Wednesday's earnings still need to show that infrastructure spending is translating into durable revenue, margins, and cash flow.
With shares entering the report after a five-session slide, a strong outlook could reset momentum. The broader market context remains mixed, as earnings resilience counters Treasury yield surge, and Kospi outlook also hinges on Nvidia's results. For investors, the key question is whether Nvidia can deliver a beat-and-raise that justifies its premium valuation.
This article is for informational purposes only and does not constitute financial advice.
