Nvidia is gearing up for its much-anticipated earnings report, with analysts setting high expectations for the chipmaker’s performance. As of Tuesday afternoon, analysts surveyed by LSEG project Nvidia’s third-quarter revenue at approximately $54.92 billion, while forecasts for the fiscal fourth quarter suggest guidance around $61.66 billion. Such figures indicate a remarkable year-over-year growth of over 56% for both periods.
However, traders at JPMorgan are betting on even loftier numbers, anticipating a financial performance that could surpass these expectations. Their “whisper numbers” suggest a revenue of $56.32 billion for the third quarter and $63.02 billion for the fourth quarter, signaling a potential $1.4 billion increase for Q3 alone, as well as a fourth-quarter guidance that exceeds consensus by $1.36 billion.
The mood among traders reflects the pressure on Nvidia to deliver. “It feels increasingly like the weight of the world is on NVDA,” a JPMorgan trading desk noted. There is a sense that market positioning is bullish for a “beat and raise,” yet the stock has notably de-rated, reflecting concerns from investors. Nvidia’s stock has even given back approximately $500 billion since the GPU Technology Conference held in Washington, D.C., last October. Investors are expressing worries that Nvidia may face difficulties in maintaining its competitive edge.
The options market indicates that Nvidia shares could experience significant volatility after the earnings announcement, with Wolfe Research estimating a potential movement of more than 6% in either direction. The stock has faced challenges recently, having dropped over 10% so far in November, amid fears of a potential artificial intelligence bubble impacting the chipmaker’s overall performance. Nvidia has also struggled relative to other high-profile players in the AI sector like AMD and Broadcom this year, with year-to-date gains indicating 35.1% for Nvidia versus 90.7% for AMD and 46.9% for Broadcom.
Furthermore, Citi’s recent analysis highlighted that Nvidia is no longer the top AI stock favored by investors. Despite these challenges, both Wolfe Research and Goldman Sachs maintain a positive outlook heading into the earnings report. Chris Senyek, a strategist at Wolfe, stated, “We continue to believe that concerns over an AI bubble bursting are overblown … at least for now. Should the broader U.S. economy hit a soft patch of economic data, we think Tech/Comm Services companies are well positioned to weather a temporary storm.”
Goldman Sachs’ trading desk echoed this optimism, indicating expectations for a “consensus beat and raise.” They emphasize that the focus will be on Nvidia’s commentary regarding its prospects beyond the upcoming quarter, as well as insights into the health of its cash flow. While there may be an initial muted reaction to the results, a rally could follow, as the stock often undergoes more normalized movements lately.
With all eyes on Nvidia’s forthcoming earnings announcement, market participants are bracing for potential fluctuations and the implications these results may have on the broader technology sector.
