Barron Roundtable panelists Ben Levisohn, Al Root, and Elizabeth OBrien discuss how NVIDIA’s earnings report will impact the market.
Technology giant Nvidia is scheduled to report fourth-quarter results after the bell Wednesday, but investors are questioning whether the company can sustain the rapid growth that drove its stock to record highs last year.
The rise of Nvidia Artificial intelligence (AI) The technology is a nod to the company’s role in designing graphics processing units (GPUs) and high-end computer chips used to power large-scale language models and generative AI tools. Nvidia controls about 80% of the market share for advanced AI chips.
The Santa Clara, California-based company’s stock has increased more than 44% since the beginning of the year, from $206.55 per share as of February 21, 2023 to $694.52 per share as of Tuesday’s close, over the past year. It rose more than 236%.
The company’s rise amid the AI boom made it the third-largest publicly traded company in the U.S. last week, surpassing Google’s parent company Alphabet and e-commerce giant Amazon in terms of market capitalization, but Tuesday’s plunge puts Nvidia below that level. below. Only Microsoft and Apple are publicly traded U.S. companies with larger market capitalizations than the tech trio.
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Nvidia stock soared to record highs last year amid the AI boom. (Photographer: Michaela Vatcheva/Bloomberg via Getty Images / Getty Images)
Uncertainty about Nvidia’s upcoming earnings report and the sustainability of its massive growth prompted a selloff on Tuesday, sending Nvidia’s market cap down to $1.72 trillion, compared to Alphabet’s $1 trillion That’s just under $760 billion. Amazon’s $1.74 trillion.
| ticker | safety | last | change | change % |
|---|---|---|---|---|
| NVDA | NVIDIA Corporation | 694.52 | -31.61 | -4.35% |
Nvidia stock price The stock fell more than 4.3% during Tuesday’s session, and that decline continued in after-hours trading, dropping another 1.9% to $680.90 per share. This is where NVIDIA last traded in early February, and is about 7.9% below its all-time high. The high closing price last week on February 14th was $739 per share.
“The market is probably a little hesitant. [Nvidia] We can provide strong enough guidance to further stimulate the market,” Frank Lee, head of technology research at HSBC, told Reuters.
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Nvidia’s earnings report will be highlighted by the company’s key role in enhancing AI tools. (Reuters/Tiron Siu/Reuters Photo)
Analysts expect Nvidia to: announce earnings LSEG estimates sales of $4.56 per share, with revenue of nearly $20.4 billion, up from just over $6 billion a year ago.
in Recent earnings report, Nvidia’s earnings per share (EPS) and revenue exceeded analyst estimates by double digit percentage points. For example, the October 2023 earnings report beat expectations for EPS by 18.7% and revenue by nearly 12.5%, while the previous earnings report released in July beat expectations by about 29.4% and 21.9%, respectively. exceeded.
“meanwhile [Wall Street] Another big “Beat and Raise” special from Jensen & Company is highly anticipated. It’s all about the pace of AI-driven spending in data centers, as the only games running GPU-generated AI applications are all going through Nvidia,” said Wedbush Securities analyst Dan.・Mr. Ives wrote in a memo to clients.
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Jensen Huang, co-founder and chief executive officer of Nvidia Corp., speaks at the Taipei Computex Exhibition in Taipei, Taiwan, Monday, May 29, 2023. (Photographer: I-Hwa Cheng/Bloomberg via Getty Images / Getty Images)
These strong results prompted a strong rally in Nvidia’s stock price following the earnings release, leading to concerns that the stock could remain vulnerable if Nvidia’s results do not significantly beat expectations. Ta.
“For stocks to go up, you can’t just match or win by a small amount. Nvidia needs to blow up,” Dennis Dick, a trader at Triple D Trading, told Reuters. Deaf,” he said.
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Investors are bracing for the possibility of stock prices moving significantly in either direction following earnings, according to data from options analysis service ORATS. Nvidia options After earnings, we’re pricing in around 11% movement in either direction.
Reuters contributed to this report.
