Nvidia is set to report its quarterly earnings after the closing bell Wednesday with investors fretting about lofty AI valuations.

Investors have been jittery about the sustainability of the AI trade as hyperscalers plan massive capital expenditures, but Wedbush's Dan Ives said he thinks Wall Street is still underestimating Nvidia's opportunity.

Viewed through that lens, Nvidia looks compelling. But there are real risks.

Wall Street shares have seen big swings this week as investors brace for all-important earnings from AI bellwether

Not as expensive as it used to be, based on one widely watched valuation measure—the price-earnings ratio. While Nvidia's stock price has soared, its earnings power has risen even quicker, pushing down the PE ratio.

Nvidia may be the most popular chip stock right now, but smart investors are beginning to look for growth elsewhere.

U.S. stock index futures edged higher on Wednesday following sharp early-week losses on Wall Street, as investors set their eyes on Nvidia's earnings which could prove to be a make-or-break moment for the AI trade.