Wall Street is on edge this week as Nvidia prepares to report its earnings, a pivotal event that could either revive markets or fuel further chaos amidst soaring U.S. debt and rising Treasury yields. Investors are keenly watching Nvidia's performance, as its results are seen as a crucial market mover in the wake of the artificial intelligence (AI) boom.

Nvidia's quarterly earnings, scheduled for release on Wednesday, are under close scrutiny. As the last of the "Magnificent Seven" technology giants to report this cycle, the chipmaker's performance is considered a bellwether for broader investor sentiment. Chuck Carlson, CEO of Horizon Investment Services, noted that Nvidia's report is central to the AI theme, which has been a major driver of the market.

Analysts, as compiled by LSEG, project Nvidia's first-quarter earnings to have surged by approximately 45%, with revenue expected to reach $43.2 billion. The company's financial health is viewed as a reflection of AI momentum and a barometer for overall investor confidence.

However, economic undercurrents related to government spending and debt are also taking center stage. Concerns over fiscal policy have led to market retreats. The yield on the 30-year Treasury note surpassed 5%, reaching its highest level since 2023, signaling investor anxiety over federal borrowing. A tax and spending bill passed by the U.S. House of Representatives, aligned with President Donald Trump's economic agenda, could expand federal debt by an estimated $3.8 trillion over the next decade. This development contributed to a downgrade of the U.S. sovereign credit rating by Moody’s.

Carlson pointed out that higher interest rates present increased competition for equities, potentially putting pressure on stock valuations if the trend persists.

Market volatility was further exacerbated by President Trump's threat to impose a 50% tariff on European Union imports starting June 1 and a potential 25% tariff on Apple if iPhones sold in the U.S. are not manufactured domestically. These remarks have renewed concerns about trade tensions and their impact on global supply chains. Nvidia could face significant repercussions, having already taken a $5.5 billion charge in anticipation of lost revenue due to Washington’s ban on exporting its H20 AI chip to China.

Despite a strong rally earlier in the year, the S&P 500 is currently down over 5.6% from its record high in February and 1.3% lower for 2025 overall. Art Hogan, Chief Market Strategist at B Riley Wealth, believes that a strong earnings report and guidance from Nvidia could reignite optimism surrounding AI investments.

In summary, this week's developments, particularly Nvidia's earnings report, are poised to provide critical signals for the direction of the U.S. share market, influencing investor expectations and market sentiment.