Nvidia’s earnings report will help to show whether the AI boom is overhyped or gaining steam

SAN FRANCISCO — Chipmaker Nvidia will release a quarterly report Wednesday that could provide a better sense of whether the stock market has been riding an overhyped artificial intelligence bubble or is being propelled by a technological boom that’s still gathering momentum.

Nvidia become the first publicly traded company to surpass a market value of $4 trillion last month, and its stock price has gained another 13% since then to create an additional $500 billion in shareholder wealth.

The latest financial results are due out Wednesday afternoon. They have become a key AI barometer during the past two years because Nvidia makes most of the chips that power the technology in vast data centers at the center of the boom.

This summer’s run-up has continued Nvidia’s jaw-dropping rise from early 2023, when the company’s market value was hovering around $400 billion. That was shortly after OpenAI’s late 2022 release of its ChatGPT chatbot triggered the biggest craze in technology since Apple released the first iPhone in 2007.

While the technology industry has been the biggest beneficiary of the AI frenzy, it’s also been a boon for the overall stock market. The benchmark S&P 500 has gained 68% since the end of 2022, with AI fervor fueling much of the investor optimism.

But even amid the general euphoria, there recently have been murmurs about whether AI mania will prove to be an echo of the late 1990s dot-com boom that culminated in an excruciating stock market meltdown in 2000 that eventually drove the U.S. economy and plunged Silicon Valley into a funk that lasted several years before the tech industry began to thrive again.

Investors were recently spooked by a combination of an MIT report that said 95% of AI pilots fail and comments from OpenAI CEO Sam Altman floating the idea that the artificial intelligence market is in a bubble.

And by some metrics, the stock prices of tech companies at the AI are looking frothy. For instance, Nvidia is trading at about 40 times its future earnings, roughly double the rate that investors traditionally believe is a reasonable level. Meanwhile, the market value of Microsoft, another AI leader, is hovering just below $4 trillion, while the values of other fellow pacesetters Amazon, Facebook parent Meta Platforms and Google parent Alphabet currently range from $1.9 trillion to $2.5 trillion.

Nvidia is expected to post another quarter of robust growth for the May-July period of its fiscal year. Analysts surveyed by FactSet…