Nvidia stock (NVDA) is back. Nevertheless it’s about to be put to the test again.
The following big event for the market is the chip darling’s earnings report, set for after the bell Wednesday.
And it’s not only Nvidia stock that’s on the road: Nvidia’s results will set the pace for other AI players.
“Nvidia’s report and guidance will likely be absolutely key to the AI infrastructure trade,” tech investor Paul Meeks told Yahoo Finance.
The past several weeks have been a roller-coaster ride for tech investors. Shares of AI giants Amazon (AMZN), Microsoft (MSFT) and Alphabet (GOOGL) are down over the past three months, with Alphabet falling greater than 6% and each Amazon and Microsoft down greater than 3%.
And second-tier AI players are struggling to regain traction as well. AMD (AMD) has fallen greater than 16% since mid-July while Marvell Technology (MRVL) is off nearly 6% in the identical period.
But strong results from Nvidia could reignite a few of that lost momentum, in response to Wedbush’s Dan Ives.
“Nvidia is the guts and lungs of this bullish tech trade because the AI Revolution takes hold,” Ives told Yahoo Finance.
Ives, who expects a “shock and awe” quarter from Nvidia, says continued strong demand for the corporate’s chips could have ripple effects across the industry. In a recent note to clients, Ives estimated that for each dollar spent on a Nvidia GPU chip, there may be an $8 to $10 multiplier across the tech sector.
Bernstein’s Mark Shmulik, who covers lots of Nvidia’s biggest customers including Meta, Amazon, and Google, told me the chip giant’s results will likely be a critical driver of Big Tech’s next move.
“Nvidia is a bellwether of the Magnificent Seven and AI trade,” Shmulik explained. “If there may be any softness, possibly rotation out of the Mag 7 picks up slightly little bit of steam, but listening to other tech earnings, core fundamentals keep delivering.”
Up to now this yr, Nvidia’s stock has soared. Shares are up 180% over the past yr and up nearly 2,900% over the past five years — setting the bar very high for earnings this quarter.
Estimates are for Nvidia’s revenue to grow 112% in its latest quarter, marking a dramatic slowdown from over 250% growth one yr ago. For Wall Street, consensus stays bullish. KeyBanc, Citi, and Goldman Sachs were amongst those on the road who reiterated their Buy rankings on the stock this week ahead of results.
While only time will tell whether Nvidia lives as much as the hype this earnings season, it’s secure to say the stakes are high.
Seana Smith is an anchor at Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Recommendations on deals, mergers, activist situations, or the rest? Email seanasmith@yahooinc.com.
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