July has turned the page. Looking back at this week-long earnings season, the U.S. stock market has been tugged back and forth by various earnings reports, and the ups and downs have almost become a daily occurrence.

But if we were to summarize this earnings season in one sentence, it actually clarifies one thing: the market is no longer willing to pay for "burning money on AI," but is willing to pay for "spending AI money wisely."

Microsoft and Amazon saw their stock prices surge upon releasing their earnings reports, thanks to one thing—clearly explaining the relationship between AI capital expenditure and real demand, and thus being rewarded. In contrast, Google's and Meta's stock prices were weak precisely because they failed to clarify this issue. Simply burning money on AI can no longer be a market consensus.

This "reward for clarity, punishment for lack of clarity" pricing logic is expected to carry directly into August. And in August, the two companies that must not fail the exam are on the line.

1. The Final Exam: NVIDIA Must Answer the "Cash Flow" Mandatory Question

After the market closes on August 26, NVIDIA will release its latest earnings report. This might be the most pivotal earnings report for the U.S. stock market in August, bar none.

As a company with a market value of $5 trillion, the question NVIDIA needs to answer this time is no longer just about the profit figures themselves, but rather the market's most sensitive nerve at the moment—cash flow.

It's important to note that NVIDIA's cash flow in the last quarter was only over $50 billion. While this number is astronomical for typical companies, in the context of a $5 trillion market value company viewed as the "shovel seller" of the AI era, the market will scrutinize: is the capital investment and ecological layout of hundreds of billions of dollars simply reckless spending, or is the money well spent?

If this question is not well answered, the resulting turmoil could be substantial. Microsoft and Amazon have already demonstrated the rewards of "clarity" with their surging stock prices, while Google and Meta showcased the cost of "lack of clarity"—NVIDIA has no third option to choose.

2. The First to Test, AMD: Every Question Relates to Its Trillion-Dollar Market Value Ambition

Before NVIDIA submits its exam, its rival AMD will take the stage first—releasing its latest earnings report after the market closes on August 4.

Currently, AMD's stock price is $472, with a market value of less than $800 billion. The company has always viewed crossing the trillion-dollar market value threshold as a goal and is currently in a narrative of striving to catch up. The market's focus on this earnings report can be broken down into four specific questions:

• First, can the revenue growth rate from data centers be maintained above 50%—the core support for AMD’s narrative;

• Second, is the shipment of MI350/MI450 ramping up or limited by capacity—determining whether the narrative can translate into revenue;

• Third, is there any loosening in the Helios delivery guidance—related to the certainty of large customer orders;

• Fourth, can the full-year revenue guidance meet market expectations—this is a direct key for the stock price on earnings night.

The four questions essentially boil down to one: can AMD’s story of chasing NVIDIA continue?

3. DCF Valuation: Two Chip Giants, Risk Exposure Vastly Different

NVDA and AMD are both in the AI chip race and are also focal points of the earnings season, with the market trading on the "future expectations" of both companies. However, if we switch to a traditional DCF (Discounted Cash Flow) valuation perspective, the level of risk revealed by the two companies is vastly different.

According to the traditional DCF valuation model, AMD's fair value is around $130 per share—whereas its current price is as high as $472, a premium of over 2.6 times. In other words, most of the current stock price is priced on future faith rather than cash flow support.

In contrast, NVIDIA’s current price is $200, only slightly above a fair value of around $180. This means its stock price is backed by tangible cash flow, and the bubble of expectations is much lower.

This comparison conveys a clear message: from the perspective of valuation safety margins, NVDA's investment risk is significantly lower than that of AMD. Even if the earnings report falls short of expectations, NVIDIA's stock price may have less room to pull back compared to AMD—one is a return from "faith price" to "fair price," while the other merely sheds a little premium.

For investors, this means that the two earnings reports in August require completely different response strategies. On AMD's earnings night, volatility will be extremely intense; failing to answer any of the four key questions could trigger a sharp decline, and position control is paramount. For NVIDIA’s earnings, the key lies not in revenue or profits—those are likely to be fine—but in the presentation of cash flow and management guidance, which will determine not only NVIDIA itself but also the entire AI sector's direction in late August.

Looking at the perspective more broadly: the rules established during July's earnings season are "clarity brings survival;" August is the ultimate examination of these rules. AMD is testing the "authenticity of the chasing story," while NVIDIA is testing the "reasonableness of spending by the leader," and DCF valuation tells us that the margin for error of the former is far lower than that of the latter.

4. In Closing

August's chip earnings season will be one of the most critical market windows for 2026. AMD submits first (August 4), followed by NVIDIA (August 26). These two earnings reports will not only determine their respective stock price directions but may also define the narrative tone for the entire AI chip sector in the second half of the year. Whether you hold chip stocks, plan to bottom-fish, or consider shorting, this is a period when you must buckle up.

BIT Securitiesplatform's options function (now online) can just provide insurance for investors ahead of these earnings reports, seeking opportunities amidst volatility:

• Hold NVDA/AMD stocks + buy put options to lock in downside risks;

• Buy straddle, not guessing the direction but betting on volatility—just need enough volatility after the earnings report to profit;

• Buy call/put options one-sided, small bets with controllable losses.

For the two major tests in August, do not rush to bet on answers. Being prepared with tools is more important than predicting numbers.

Risk Warning:

The above content (including earnings report dates, market values, cash flows, DCF fair value calculations, and related options strategy examples) is for market commentary and educational purposes only and does not constitute investment advice, research reports, offers, or solicitations, nor does it predict or guarantee the future performance of any securities such as NVDA, AMD, etc. The DCF fair value mentioned is based on internal model calculations with specific assumptions and is for reference only, not representing predictions of future stock price trends, as actual fair values may vary significantly based on different assumptions. Options trading involves significant risks, including but not limited to principal loss, time value decay, and exercise/assignment risk; leverage may amplify profits as well as losses and is not suitable for all investors. Market data can change at any time; please refer to real-time quotes in the BIT App and official company earnings reports.

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