Topline
Nvidia shares fell slightly Wednesday as investors recalibrated ahead of the artificial intelligence leader’s quarterly earnings results due this afternoon, a report described as the most crucial upcoming event for the hot, but rocky, stock market.
Nvidia is set to report a pivotal earnings report Wednesday afternoon.
Key Facts
Nvidia stock fell 1.9% to $145 by mid afternoon, cutting into Tuesday’s near 5% gain.
The volatile trading comes ahead of the semiconductor chip designer’s third-quarter results slated for shortly after 4 p.m. EST Wednesday.
It’s a result that will likely have wide sweeping ramifications for the broader market, which has calmed after a sharp uptick following the election.
Nvidia earnings “can dictate the near-term direction of the market,” predicted Bank of America strategists Gonzalo Asis and Ohsung Kwon in a Sunday note to clients, adding that Nvidia is the “most dominant” and “most important stock in the market.”
Surprising Fact
Options traders price in a greater risk of a Friday move for the benchmark S&P 500 index than the trading sessions following the next slate of typically pivotal economic updates in the November jobs and consumer price index inflations reports and the December meeting of the Federal Reserve’s interest rate panel, according to Bank of America. Nvidia accounts for more than 7% of the market capitalization-weighted S&P.
Nvidia Earnings Preview
Wall Street expects another blowout quarter for Nvidia. Consensus analyst forecasts call for a record $0.75 earnings per share ($17.4 billion net income) in the three-month period ending in October and $33.2 billion in revenue, according to FactSet. That would represent the sixth consecutive quarter of Nvidia setting new records for all three of those metrics. The projections call for more than 80% year-over-year revenue and profit growth in the third quarter for Nvidia, well above the sub 20% annual top-and-bottom line increases brought in during Q3 by the world’s only other $3 trillion companies, Apple and Microsoft.
Key Background
Nvidia is the most valuable public company in the world by market cap, with its $3.56 trillion valuation outstripping Apple’s $3.45 trillion and Microsoft’s $3.08 trillion. Nvidia enjoys close to an 80% market share in AI accelerators, the highly expensive processing equipment necessary to train the in-vogue generative AI models developed by entities from Amazon to the Danish government. The company’s financial performance and valuation have skyrocketed during the recent generative AI revolution. Its split-adjusted share price is up about 850% over the last two years, sending its market cap from below $400 billion to within striking distance of $4 trillion while its projected net income of $67.9 billion during this fiscal year would be a more than 1,400% improvement from the $4.4 billion for the year encompassing most of 2022.
Forbes Valuation
We estimate Nvidia CEO Jensen Huang’s net worth at around $128 billion as of Tuesday afternoon, making him the ninth-richest person in the world.
CORRECTION (11/19): This story has been updated to reflect the date of Nvidia’s earnings report.