Nvidia's Rally Faces the Test of Earnings and External Winds

Nvidia shares extend winning streak fueled by easing supply chain risks and strong AI demand, as key partner TSMC reports surging revenue.

Nvidia shares closed at €160.26 on Friday, marking a daily gain of 2.53% on trading volume of roughly 160 million shares. The advance was fueled not by company-specific news, but by a favorable shift in the macroeconomic climate. Reports of a potential ceasefire in the Iran conflict eased supply chain risk premiums, while fresh US inflation data pointed to a stabilizing price environment, creating more favorable valuation conditions for capital-intensive growth stocks like Nvidia.

This external boost extended a notable winning streak for the chipmaker. The stock has now recorded gains for eight consecutive trading sessions, its longest such run since November 2023. The rally finds a solid foundation in Nvidia's own staggering financial performance. For the full fiscal year 2026, the company reported total revenue of $215.9 billion, a 65% increase. Its data center business alone surged 68% to $193.7 billion.

A significant portion of that demand flows through its key manufacturing partner. Taiwan Semiconductor Manufacturing Company (TSMC), the world's largest contract chipmaker, provided a powerful signal with its own preliminary first-quarter 2026 results. The company posted revenue of $35.6 billion, a 35% year-over-year jump that exceeded analyst expectations. March monthly sales alone climbed 45%, driven by the ramp of its 2-nanometer production and rising orders for AI accelerators. Nvidia is no small client, accounting for roughly 22% of TSMC's revenue.

Analyst Sravan Kundojjala of SemiAnalysis expects TSMC to "easily surpass" its annual growth target of 30%, noting the AI segment has more than compensated for weaker smartphone and PC markets. Investors will scrutinize TSMC's full quarterly report on April 16th for its capacity planning through 2027, which will serve as a direct indicator of Nvidia's future supply situation.

Beyond securing supply, Nvidia is strategically shaping the architecture of future data centers. The company recently participated in a $400 million funding round for SiFive, a chip designer based on the open RISC-V architecture, valuing the startup at $3.65 billion. SiFive develops data center CPUs compatible with Nvidia's CUDA software and NVLink Fusion system. This move aims to create an infrastructure where Nvidia's GPUs can function independently of a customer's chosen CPU platform, further cementing its central role in the "AI factory."

For the current first quarter of fiscal 2027, Nvidia has guided for revenue of approximately $78 billion, a figure that deliberately excludes its China business. Despite the recent rally, the stock still trades about 11% below its 52-week high. Recent history offers a note of caution: in October 2025, Nvidia shares soared nearly 15% in five days only to surrender all those gains in the subsequent weeks. Similar patterns occurred multiple times throughout 2025, where positive news from suppliers or hyperscalers triggered short-lived buying pressure.

The next major catalyst for the stock arrives on May 20, 2026, when Nvidia releases its quarterly earnings after the US market close. The market will be keen to see if demand for AI hardware remains robust amid a tightening competitive landscape. Until then, the stock's trajectory is likely to remain sensitive to geopolitical developments and broader sector sentiment, testing whether the current rally has staying power or will follow the volatile patterns of the past.