Nvidia's premarket stock surge is attributed to its investments in five AI companies: ARM, Recursion Pharmaceuticals, SoundHound, TuSimple, and Nano-X Imaging.

These investments have led to significant increases in the stock prices of the involved companies, with some experiencing over 100% gains.

The market is highly anticipatory of Nvidia's upcoming earnings report, which is expected to heavily influence both the company's stock and the broader AI and tech sectors.

With Nvidia's shares driving a significant portion of the S&P 500's gains, the earnings results could prompt a substantial market response, with an 11% stock price swing anticipated.

Nvidia's performance is seen as indicative of the AI industry's health, and its corporate outlook could either boost market optimism or trigger profit-taking.

Nvidia's market capitalization growth has made it the third most valuable U.S. company, surpassing Alphabet.

The forthcoming earnings report is not only crucial for Nvidia but is also likely to affect other AI and tech companies, given the interconnected nature of the sector.

Investors are advised to exercise caution in the AI market, which is described as frothy, and to maintain preparedness with watch lists and exit strategies.