Semiconductor giant Nvidia (NASDAQ:NVDA) is set to release its first-quarter earnings report, a key event that could significantly impact the ongoing U.S. stock market rally.

What Happened: Earnings from semiconductor giant Nvidia are set to test the ongoing U.S. stock market rally, Reuters reported on Wednesday.

Nvidia has seen a 90% surge in its stock this year, making it the third-largest U.S. company by market value, trailing only Microsoft and Apple. The company's influence on broader markets has grown due to its leading position in artificial intelligence.

The company's chips are considered the gold standard in AI, making its results a key indicator for the AI industry. Nvidia now holds a significant weighting in major indexes and ETFs, with over 5% in the S&P 500 and 6.5% in the Nasdaq 100.

The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average have all reached record highs this month, buoyed by strong earnings and hopes for a soft landing for the U.S. economy. Robust earnings from Nvidia could further justify high stock market valuations.

"If they do well ... there are going to be a lot of stocks that ride its coattails," said Jay Woods, chief global strategist at Freedom Capital Markets.

"It's very rare you have one stock that can have such a dramatic impact on the overall market. But Nvidia has earned that."

Nvidia's fiscal first-quarter results are expected to significantly impact AI-related stocks. The company's quarterly revenue is projected to triple to $24.6 billion. Investors are keenly watching to see if Nvidia can meet high expectations set by its previous blockbuster results.

Why It Matters: The anticipation surrounding Nvidia's earnings is immense, with some analysts comparing it to the excitement of a major concert. The market is keenly focused on whether the company can live up to the high expectations set by its previous performances.

Additionally, Nvidia CEO Jensen Huang has emphasized the importance of the company's partnership with Dell Technologies Inc. in expanding AI adoption. In an interview with Bloomberg Television, Huang stated that the collaboration aims to bring generative AI capabilities to a broader range of customers, enabling them to create their own "AI factories." He noted that the goal is not just to deliver hardware but to provide a comprehensive infrastructure.

Image via Shutterstock