Nvidia, a technology company, saw its shares rise approximately 2% on Wednesday amidst expectations of a strong outlook. The chip designer's early investments in artificial intelligence are expected to pay off, further boosting the market. Nvidia's high-end chips, utilized in generative AI like ChatGPT, have contributed to its position as the most valuable chip company. Prior to the release of its second-quarter results, investors have increased their confidence in Nvidia's performance. Shares have surged 14% in the past week and have tripled in value so far this year. JJ Kinahan, CEO of IG North America, stated that the current market appears to heavily rely on Nvidia's success. In the previous quarter, Nvidia's promising outlook led to its market value reaching $1 trillion in May and triggered a rally in the S&P 500 technology sector. Options data suggests that the stock could experience an approximately 11% swing by Friday, larger than the average move of 8. 6% seen after Nvidia's results in the last eight quarters.

Despite this, it is projected to be lower than the 24. 4% surge after the previous earnings report. Nvidia is part of the group of mega-cap stocks known as the Magnificent Seven, along with companies like Apple and Tesla, which have contributed to the 14. 3% rise of the S&P 500 this year. Positive results from Nvidia are expected to reignite the US stocks rally, which has recently paused. The stock's impressive performance has led to a valuation multiple of nearly 43 times the consensus earnings for the next 12 months, just below its three-year average of 45, according to Refinitiv data. Analysts anticipate a significant increase of 112. 6% in third-quarter revenue to $12. 61 billion, with a focus on sales at Nvidia's data center unit, particularly its prized H100 chip used in AI. Jake Dollarhide, co-founder of Longbow Asset Management Company, believes that the previous quarter's outstanding results have already been factored into investors' expectations for the graphics cards maker centered on AI, making it difficult to repeat the same level of surprise. Any results falling below these lofty expectations could lead to market turbulence, particularly for the Nasdaq. In other news, it has been revealed that chip designer Arm enlisted 28 banks for its highly anticipated initial public offering without establishing a fee arrangement, highlighting SoftBank Group's leverage over underwriters seeking a role in the IPO.