Nvidia (NVDA), a leading player in the artificial intelligence sector, is set to announce its quarterly earnings after the markets close today. Traders are bracing for a significant movement in the stock price, with projections indicating a potential shift of approximately 6.2% in either direction by the end of the week.
Based on current options pricing data, this anticipated fluctuation could see Nvidia's stock landing at either $192.88, an all-time high representing a staggering $4.7 trillion market capitalization, or dropping to $170.66, its lowest value since mid-July. Since the launch of ChatGPT in late 2022, which ignited the AI frenzy, Nvidia has reported earnings ten times. Following four of these reports, stock prices experienced double-digit gains, with the most recent surge occurring in May 2024.
Despite the excitement surrounding AI, Nvidia's earnings have faced challenges in meeting the lofty expectations set by Wall Street. In the last four quarters, the stock has seen an average movement of 3.2% from the time of earnings release to the end of the week. Notably, Nvidia managed to close the week above its pre-reporting price only once—during the last earnings report in May.
Investors are keenly awaiting Nvidia's latest report for confirmation of sustained demand for AI technologies. Major hyperscalers like Microsoft (MSFT), Alphabet (GOOG), and Amazon (AMZN) have recently reaffirmed their commitment to invest hundreds of billions in data center infrastructure and other capital goods, citing ongoing robust demand in the AI and cloud computing sectors. Nvidia, holding an estimated 80% to 90% share of the AI chip market, is poised to be the primary beneficiary of these investments.
Wall Street analysts are also looking for insights regarding Nvidia's sales to China. In May, Nvidia warned that the tightening of export controls by the Trump administration could potentially lead to a loss of up to $8 billion in the second quarter. Recently, Nvidia and competitor Advanced Micro Devices (AMD) reached a deal with the Trump administration, allowing them to resume sales of critical AI chips to China in exchange for a 15% cut. Although this agreement came too late to influence today's results, it will likely factor into Nvidia's future guidance.
Analysts remain overwhelmingly optimistic about Nvidia's stock. Among the 14 analysts tracked by Visible Alpha, a remarkable 13 rate it a “buy”, while one maintains a neutral “hold” rating. Price targets vary significantly, ranging from $155 to $225, with the majority clustered above $200. As of early Wednesday trading, the stock was relatively stable around $182, just ahead of the eagerly anticipated earnings report.
Stay tuned for updates as Nvidia's quarterly results unfold and the market reacts to this pivotal moment in the AI industry.
