Why Nvidia and its technology matter to markets, investors

A big focus for Wall Street is Nvidia's (NVDA) upcoming earnings as it looks to see how it will impact the market. In recent history for the market, the chip-making giant has led a huge rally for the tech sector and the S&P 500 (^GSPC), with its stock price climbing over 91% year-to-date.

Yahoo Finance's Akiko Fujita joins Wealth! to break down everything Nvidia, from its earnings to its products and its relation to the broader market.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Nicholas Jacobino

Video transcript

Well, we haven't stopped talking about NVIDIA all week.

And for good reason.

This afternoon we finally get the results that investors have been waiting for from the chip giant.

But why is NVIDIA so important to investors and the market here to break it down?

For us, finance is very own.

Akiko Fujita.

Hey, Akiko.

Hey there, Brad.

You're certainly right.

NVIDIA has been at the heart of the A. I trade with the stock up more than 90% year today.

Going into these latest results and the recent investors have been so bullish on NVIDIA is because they make the most advanced chips that are used to run a I.

Today we are talking about chips known as graphics processing units or GP US, that are capable of processing many pieces of data simultaneously.

And they are key to machine learning.

Now when it comes to the most advanced chips used for a I. NVIDIA has a dominant position with a MD far behind in second place.

And because of that, NVIDIA is seen as a bellwether on where a I demand is.

All of that led to huge gains for the company's stock.

Take a look NVIDIA makes up just over 5% of the S and P 500 but it's accounted for nearly 20 5% of the index's returns year to date.

And when it comes to earnings, NVIDIA's share amounts to 23% of the S and P and Brad.

Of course, a lot of investors hoping that number goes even higher, with those results coming out later tonight.

And Akiko, we know that NVIDIA makes most of their money from data centres and then they reinvest a lot of that too.

What are data centres?

Why are they so important for a I and what's the latest updates there?

So in the simplest terms, data centres provide the building blocks for our tech infrastructure.

It is computing and storing storage resources allow for the delivery of applications.

We use the data that gets stored and processed when it comes to artificial intelligence.

Data centres are critical to training and deploying complex machine learning models and algorithms.

Now, with that, said, a I technologies require huge amounts of computational power storage space, low latency networking to train and run A I models and NVIDIA's graphics card are considered the most fastest and the most efficient for NVIDIA, and that's led to huge gains for the company.

When you look at the revenue breakdown, 78% of the revenue now comes from data centres and we'll see what that number holds after the bell today.