Wall Street is waiting in the wings for Nvidia’s earnings report.

The Dow was up 130 points, or 0.3%, while the S&P 500 was up 0.2%. The Nasdaq Composite was up 0.1%.

Nvidia, which is set to report quarterly results after the market’s close, was hovering right around breakeven. Though Wall Street tends to overhype earnings reports, Nvidia may be one of the few that lives up to its billing.

First of all, Nvidia has a market cap north of $4 trillion. That alone gives it a massive pull on the S&P 500. Nvidia’s earnings and outlook will also provide Wall Street an idea of demand for artificial intelligence, and AI spending has been a major driver for the stock market this year.

Sevens Report Research’s Tom Essaye called it “arguably the most important event of the month.”

“If NVDA disappoints, it risks not only sending AI stocks lower, but also the entire market,” he writes.

He notes Nvidia has added 2.3% of the S&P’s gains this year, while other firms that have benefitted from AI hype like Microsoft, Meta Platforms, Broadcom, and Palantir account for another 3.2%. Essaye notes Meta, Amazon, Meta, and Alphabet are spending hundreds of billion dollars to build AI infrastructure.

“Essentially, this AI infrastructure buildout is acting like a mini-government stimulus program!” Essaye adds. “And it’s not just benefiting the chipmakers. It’s also benefiting utilities (data centers need power), networking, construction, cooling, transportation, etc.”

A negative report could flow through the broader market if it portends a slowdown in spending. It would also put into question analyst expectations for S&P 500 earnings of $265 a share in 2025 and $299 in 2026.

“Markets are pricing substantial AI earnings growth that will drive S&P 500 earnings sharply higher,” Essaye writes. “If AI earnings growth disappoints, this market has a large valuation problem. I say that because 2026 earnings will not stay at $299. They will drop sharply, perhaps to $275 or lower.”

That doesn’t mean Nvidia’s earnings report will disappoint. In fact, Essaye says they probably won’t miss expectations. But the market’s reliance on these trends does set up each report to be a blockbuster event in case AI enthusiasm wanes.

“That could send the S&P 500 lower regardless of stagflation risks, the Fed, or anything else macro-oriented,” Essaye concludes.