Nvidia earnings will put an entire stock market meme to the test. Again.

This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:

Nvidia (NVDA) is at the center of a new meme stock rally.

Its earnings report next Wednesday will put that theme to the test. Again.

Wedbush analyst Dan Ives, the most creative voice on Wall Street today, marrying a dramatic flair with a prescient, unabashed bullishness on AI’s investment case, called Nvidia’s quarterly results from last May a “jaw dropping” event.

“The Street was all awaiting last night’s Nvidia quarter and guidance to gauge the magnitude of this AI demand story with many skeptics saying an AI bubble was forming and instead Jensen & Co. delivered guidance for the ages,” Ives wrote at the time.

And Ives was only just getting started.

In August, Nvidia’s increased revenue forecast was a “drop the mic” moment for the company, in Ives’ view.

By November, Nvidia CEO Jensen Huang had been crowned by Ives as the “Godfather of AI” after the company once again raised its sales forecast. Ives added the company’s November outlook was “guidance heard around the world as the AI Revolution is accelerating into 2024 for the broader tech sector.”

Three months later, and what do we have in the market? Anything and everything with an AI play catching a bid while Nvidia has become the third-largest company in the market.

Late Wednesday, for instance, the chip giant disclosed modest stock investments in Arm Holdings (ARM), SoundHound AI (SOUN), and biotech company Recursion Pharmaceuticals (RXRX).

Shares of all three rallied on Thursday following the news, most notably SoundHound, which gained 60% on news Nvidia owned about 1.5% of the company’s outstanding shares as of Dec. 31.

Add to this the action seen in Arm stock last week and the now weekslong rally in cloud storage play Super Micro Computer (SMCI) — which has seen its stock gain ~200% in a month and nearly 1000% over the last 12 months — and we can see that a bona fide AI craze has broken out in the stock market. One in which the mere suggestion that a company could be set to benefit from accelerating AI-related spending is enough to bid shares higher.

Now, as Ives noted in his May 2023 report, the notion that an AI-fueled market rally is hanging by a thread only Nvidia can sew on tightly is far from a novel idea. And so perhaps it is our error to see next week’s results from Nvidia as holding much significance beyond the fortunes of Nvidia itself.

Moreover, the corporate earnings outlook that can backstop a rally growing beyond AI continues to improve. Meanwhile, the number of times corporate executives have brought up AI on earnings calls of late has actually been on the decline.

And unlike the meme stock rally of 2021 in which fundamental stories were haphazardly retrofitted to explain why a stock might double or triple in a few trading days, the enthusiasm for AI plays is based on a firmer foundation of actual corporate spending.

But with the locus of that investment found on Nvidia’s income statement, it’s hard to shake the feeling that these results will mean something bigger for the stock market rally. Even if we’ve seen this film before.