All Eyes on Nvidia's Earnings Report: Will the AI Leader Deliver?

Amid recent turbulence in the US stock market, driven by weakness in tech stocks, investors are keenly watching Nvidia's upcoming earnings report.

Amid recent turbulence in the US stock market, driven by weakness in tech stocks, investors are keenly watching Nvidia's upcoming earnings report. Scheduled for after the market closes on August 28, Nvidia's results will provide crucial insights into the future of AI investments and semiconductor demand. This blog explores what to expect from Nvidia's earnings announcement and its potential impact on the market.

1. Anticipation for Nvidia’s Earnings Report

Nvidia is set to release its Q2 earnings and guidance on August 28. If Nvidia indicates robust semiconductor demand through 2025-2026, it could signal continued strong investment in AI from other companies. Nvidia's stock has surged approximately 150% this year, significantly contributing to the rise in the S&P 500 Index. Given this strong performance, the market is closely watching to see if Nvidia can meet elevated expectations.

2. Heightened Expectations and Market Concerns

Nvidia has consistently exceeded market expectations for six consecutive quarters. However, due to a series of earnings surprises, market expectations have risen significantly. Additionally, potential risks such as delays in the launch of the new GPU, Blackwell, add to the uncertainty surrounding the report. Investors will be keen to see how Nvidia addresses these concerns.

3. AI Bubble and Post-Earnings Volatility

While the "Magnificent Seven" tech giants, excluding Nvidia, have reported strong investments in AI, there are growing concerns about the actual returns from these investments. Despite continued investment in AI, companies like Microsoft, Amazon, and Alphabet have faced stock declines after their earnings reports, reflecting skepticism about immediate AI gains. Nvidia's stock also experienced fluctuations, with a drop below $100 earlier this month, although it has rebounded recently.

4. Looking Ahead: Potential Market Impact

Nvidia’s earnings report could either dispel concerns about the AI bubble or exacerbate market volatility. With the stock having risen 23.5% in the past two weeks, there is a possibility of increased volatility following the earnings announcement. According to options analysis firm ORATS, Nvidia's stock could fluctuate by about 10.3% the day after the report, which is higher than the 8.1% volatility seen in recent years.

5. Economic Indicators to Watch

In addition to Nvidia's report, upcoming economic indicators could influence the stock market. On August 30, the US Personal Consumption Expenditures (PCE) price index for July will be released. Core PCE, excluding volatile energy and food prices, is expected to rise by 0.2% for the second consecutive month, approaching the Federal Reserve's 2% inflation target. Additionally, data on weekly unemployment claims and the preliminary estimate of Q2 GDP growth will be released on August 29.

Nvidia's earnings report is a critical event for the stock market, with potential to influence investor sentiment and market trends. The report may provide insights into the sustainability of AI investments and affect broader market performance. As Nvidia's results unfold, investors should stay alert to potential market reactions and upcoming economic data.