For Nvidia, no earnings bump is no problem

What are the key takeaways from Nvidia’s earnings announcement—and markets’ reaction to it? How have the Big Six Canadian banks performed, and what is driving those results?

Market recap

• Equity markets rose this week on optimism, yet again, around a deal between the U.S. and Iran.
• The S&P 500 rose 0.9%, led by health care and utilities, while the TSX added 1.9%. Now, step back and picture it: Earnings and productivity growth are running on the back of new technological development; the spillover is driving strong growth across broader segments of the U.S. economy; the IPO pipeline is stirring with firms looking to raise capital and cash in on new business models; a prolonged period of disinflation is giving way to upward pressure on core prices; and the Federal Reserve, which had been easing/on hold, is staring down the barrel of potential rate hikes.
• All the while, the equity market is whistling past the graveyard of rolling global macroeconomic shocks, pushing record highs by the week, while drawing more retail enthusiasm and leverage.

Nvidia

Last week, Nvidia’s announcement of Q1 results marked the unofficial end of Big Tech’s earnings season, and while the company did beat analysts’ forecasts on both revenue and earnings per share, it was not enough to move the stock higher.¹ Despite markets’ muted response, we still take the story as a positive; Nvidia’s stock had already moved up quite a bit heading into the announcement, and the company’s record profits are a bullish sign for the artificial intelligence (AI) theme. At the beginning of the year, sky-high high expectations had led to some negative investor sentiment around AI, with average earnings reports being perceived as misses, and above-average reports being viewed as middling. Only massive beats were good enough to move the stock price. In that light, Nvidia’s stock price being only slightly down is actually good news. Beyond markets’ reaction, there wasn’t anything in the company’s forward guidance that we would interpret as a cause for concern; if there had been any supply issues or shifts in demand, they would have been mentioned. If anything, it was more of a continuation of the status quo—which, for a company that has done as well as Nvidia, is a good result. If there is one aspect of Nvidia’s demand situation that we’ll continue to monitor, it is the fact that the company owns portions of some of the other Tech firms that buy its products. This potentially creates a circular cycle of artificial demand that may not be sustainable. Broadly, however, the company appears to be on strong footing. The company also increased its dividend and announced a massive $80 billion share buyback. While we have gradually taken down our weight in Nvidia over the past few months to capitalize on other opportunities in Tech, our position is still significant—it is just not an overweight position anymore.

Bottom line: Nvidia’s earnings show that there is still optimism around the AI theme and Tech more broadly—even if the company’s stock price didn’t move much.

Canadian banks

Speaking of earnings: Canada’s Big Six banks are set to report their latest results this week, and broadly speaking, we expect profits to be strong. This would be especially impressive given that all six banks outperformed expectations last quarter.² Within Canada we still think the three big sectors—Energy, Materials, and Financials—are where you want to invest. It is this trio that have been dominating flows lately. The most likely headwind for Canadian banks is the health of the consumer, which could be affected by inflation. The upcoming United States-Mexico-Canada agreement (USMCA) renegotiation will also have an outsized impact on the Canadian economy, including businesses with which the banks have significant ongoing relationships. The banks’ loan loss provisions, while not completely gone, are now declining. And it is worth monitoring consumer credit card debt, which is trending higher and could be further exacerbated if interest rate hikes occur. Overall, though, the banks appear to be in good shape, with healthy dividends but valuations that may be a bit stretched for the sector.

Bottom line: Despite some potential headwinds, we expect this to be a strong earnings season for Canadian banks—but it is the forward guidance that will be the key.

Geopolitics

As the apparent stalemate in the Strait of Hormuz drags on, the U.S. has decided to extend its waiver of sanctions on Russian oil—a potential sign that the impacts of the Iran conflict are spilling over into other areas of U.S. foreign policy.³ Our view is that geopolitical risks could start to decrease from here—provided, of course, that the Strait of Hormuz is eventually re-opened. The United States’ operation in Venezuela, while controversial, was over quickly and considered by the Trump administration to be an easy ‘win.’ While the early days of the Iran conflict saw similarly impactful military action, the rest of the operation has not been as much of a clear-cut success. The longer the stalemate persists, the more it appears that the full ramifications of the conflict may not have been thought out. Given the upcoming U.S. midterm elections in November, we wouldn’t expect the conflict to heat up too much or the administration would risk further turning off voters. After that, much will depend on how Trump envisions his legacy—keeping in mind that he is likely to have fewer allies in the Senate and House of Representations after the midterms if polls are to be believed. If and when the Strait of Hormuz is opened, not only will geopolitical risks likely decline, but it should help to ease volatility as well. That should support a continuation of strong corporate earnings as long as no other unexpected market shocks occur. There is also the counterintuitive possibly, floated by Amazon founder Jeff Bezos in a recent interview, that AI’s productivity benefits could lead to more jobs rather than fewer.⁴ If true, that could provide some longer-term support for consumers—and, in turn, company profits.

Bottom line: Once the Strait of Hormuz is open, we’d expect geopolitical risks to diminish. For now, though, it is still unclear how the conflict will be resolved.

Positioning

For a detailed breakdown of our portfolio positioning, check out the latest BMO GAM House View Report, titled A tale of two markets: U.S. optimism meets Canadian caution .

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Originally Posted May 25, 2026 – For Nvidia, no earnings bump is no problem