Nvidia Stock May See Its Biggest Post-Earnings Move in a Year This Week

Artificial intelligence bellwether Nvidia (NVDA) is at a pivotal moment as it prepares to report its quarterly results after the markets close. Analysts and traders alike anticipate this earnings announcement could initiate significant stock movements, marking it as potentially the biggest post-earnings shift Nvidia has experienced in a year.

Market Expectations

According to recent options pricing data, Nvidia’s stock is projected to fluctuate by approximately 6.2% in either direction by the week’s end. This range translates to share prices hovering around $192.88—an all-time high that would push Nvidia’s market capitalization to an astonishing $4.7 trillion—or down to $170.66, its lowest price since mid-July.

Over the past year, Nvidia has experienced considerable volatility in the aftermath of its quarterly earnings reports. Since the introduction of ChatGPT in late 2022, which ignited the AI boom, Nvidia’s stock has witnessed considerable movement post-earnings; in fact, it has reported earnings ten times during this period. Interestingly, the stock saw double-digit gains following four of those reports with the latest notable surge occurring in May 2024.

However, it is essential to recognize the challenges Nvidia has faced as it strives to meet Wall Street’s incredibly high expectations. In the past four quarters, the stock has only averaged a 3.2% movement following earnings reports, and it finished above pre-earnings levels in only one instance—the recent report in May.

Focus on AI Demand

Investors are poised to scrutinize Nvidia’s upcoming report for insights regarding the ongoing demand for AI technology. Industry giants such as Microsoft, Alphabet, and Amazon have recently reaffirmed their substantial investments—amounting to hundreds of billions of dollars—towards data center infrastructure, a clear indicator of the sustained demand for AI and cloud computing services. Nvidia, holding a commanding 80% to 90% share of the AI chip market, stands to benefit significantly from this booming demand.

The expectations are heightened for Nvidia to provide robust evidence of continued strength in AI-related sales as its products power many aspects of artificial intelligence and data processing technologies.

China Sales and Export Controls

A critical aspect of Nvidia’s upcoming earnings report will be updates on sales to China. The company had previously warned in May that tighter export controls, imposed by the Trump administration, could result in losses of up to $8 billion for the second quarter. However, amidst changing regulatory landscapes, Nvidia and competitor Advanced Micro Devices reached an agreement allowing them to resume sales of crucial AI chips to China, albeit with a 15% discount. While this agreement was established too late to influence the upcoming earnings results directly, it will be a focal point in Nvidia’s guidance moving forward.

Analyst Outlook

The sentiment among analysts covering Nvidia remains overwhelmingly positive. Among the 14 analysts tracked by Visible Alpha, 13 currently rate Nvidia stock as a “buy,” while one analyst maintains a neutral “hold” rating. Their price targets range significantly, from as low as $155 to as high as $225, with most recommendations suggesting values above $200. As of early Wednesday trading, Nvidia’s stock was relatively stable near $182, reflecting the cautious optimism surrounding its impending earnings report.

Conclusion

As Nvidia approaches its earnings announcement, the market anticipates a potentially historic post-earnings movement. Investors are watching closely, seeking reassurance regarding the company’s position within the burgeoning AI sector and its responsiveness to global market conditions, including regulatory limitations on exports to China. With a predominant market share in the AI chip segment and robust demand from major tech firms, Nvidia has a solid foundation for potential growth, provided it can successfully navigate the challenges presented by high expectations and geopolitical factors.

The stock’s ensuing movements will not only influence Nvidia’s short-term trajectory but also serve as a barometer for investor sentiment in the broader technology and AI markets. As shareholders await the results with bated breath, it remains to be seen whether Nvidia can live up to its formidable reputation, effectively harnessing the ongoing AI revolution while managing the complexities of the global economic landscape.

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