2/19/2024

The market is waiting for Nvidia’s report

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Key points:

  • Nvidia’s earnings report on February 21 will test the company and the AI boom.
  • Shares of other AI-focused companies also rose.
  • Nvidia is expected to generate earnings of $4.56 per share and revenue of $20.378 billion.

This Monday is a holiday in the United States as the country celebrates President’s Day (George Washington Day). However, this does not mean that markets will be calm this week. Instead, the focus is on the upcoming quarterly report from Nvidia, which has found itself at the center of the artificial intelligence frenzy.

Nvidia extends S&P 500 rally

Nvidia, the chipmaker, faces a pivotal moment with its earnings report on Wednesday, serving as a crucial test for one of the market’s high-performing entities. This evaluation extends to the broader surge in U.S. stocks driven by the fervor surrounding artificial intelligence (AI) in recent months.

The anticipation of substantial business opportunities in AI has propelled Nvidia shares to an impressive 46% surge since the beginning of the year. Notably, the company’s market capitalization has experienced a remarkable increase of $570 billion, surpassing Intel’s value by more than three times. In the preceding year of 2023, Nvidia’s shares soared by nearly 240%.

It’s noteworthy that the chipmaker’s profits have contributed to over a quarter of the S&P 500’s gains this year. The benchmark index has achieved a nearly 5% increase year-to-date, building upon the positive sentiment surrounding AI that elevated the index by 24% in 2023.

Tech giants are under pressure from Nvidia

Consequently, Nvidia has ascended to become the third most significant company on Wall Street, trailing only Apple and Microsoft. The company has also established itself as a frontrunner in the artificial intelligence (AI) sector. This positive trajectory has been reflected in the stock performance of other AI-focused companies this year, such as Super Micro Computer Inc, which has witnessed a remarkable 182% increase year-to-date, and Arm Holdings, showing a substantial rise of nearly 71%.

Meanwhile, Meta Platforms, expressing a strong interest in AI, has seen a 34% surge in its shares this year. On the contrary, Apple, perceived as a comparatively slower participant in the AI competition, has witnessed a decline of 5% in its shares. Tesla, after cautioning about “notably weak” sales growth and decreasing profits for the year, experienced a notable drop of almost 20% in its shares.

Expectations from Nvidia

Nvidia is scheduled to unveil its quarterly earnings outcomes on February 21, with Wall Street anticipating earnings of $4.56 per share and a projected quarterly revenue increase to $20.378 billion, compared to $6.05 billion a year earlier, as indicated by the consensus estimate from 33 analysts using LSEG data. Given Nvidia’s substantial size and pivotal role in the evolution of artificial intelligence, the company’s performance is poised to exert a significant influence on market sentiment.

An unsatisfactory report from Nvidia may also have a cascading effect, potentially impacting other major stocks in the market.

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