U.S. semiconductor manufacturer Nvidia’s stock price has so far shown a significant rise, leading the overall market. But with such strong performance, even among bulls, there are now growing doubts whether the results announced on the 21st will be enough to push the stock price up even further, even if they beat market expectations.
The key for Nvidia, and the market as a whole, now is for the company to convince investors that its revenue outlook is consistent with market expectations and for further growth in generative AI. Goldman Sachs Group’s trading desk ranks Nvidia as “the most important stock on the planet” due to its influence on the overall stock market.
Nvidia is the most important stock on the planet – Goldman’s Lubner
Kim Forrest, founder and chief investment officer of Boke Capital Partners, pointed out, “NVIDIA is the driving force.This is the stock that truly determines the direction of the market.” “That’s why everyone is fascinated by this stock. It will be interesting to see if it can produce even more impressive numbers from here.”
Nvidia stock price
Source: Bloomberg
NVIDIA’s market capitalization currently exceeds $1.7 trillion (approximately 255.14 trillion yen). Its weight in the S&P 500 stock index is the third largest after Microsoft and Apple. Therefore, a swing either up or down could mean an increase or decrease in value of billions of dollars for investors.
According to Bloomberg data, Wall Street expects Nvidia’s sales to exceed $20 billion in the November 2023-January 2024 period (fourth quarter), an increase of nearly 240% from the same period last year. If this actually happens, it will be the third consecutive quarter of triple-digit sales growth. Nvidia will announce its financial results after the close of regular trading on the 21st.
NVIDIA stock price, 12-month target price average, target price lower limit, target price upper limit
Source: Bloomberg
The market reaction immediately following the announcement of the last two financial results was not encouraging. In the August-October (third quarter) financial results announced in November, the company’s outlook fell short of the market’s high expectations, and the stock price fell. In addition, August started with a sharp rise in the stock market the day after the announcement as financial results and forecasts exceeded market expectations, but the stock market subsequently stalled due to the decline in overall market prices. However, in both cases, stock prices have risen significantly since then.
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“Stocks always feel most expensive right before earnings are announced,” said Michael Sansoterra, chief investment officer at Sylvanto Capital Management. “It’s hard to say whether investors will make a profit on the day the results are announced, but I don’t think it’s a huge problem,” he said.
Nvidia stock has risen 40% since the beginning of the year. This percentage increase was the largest among stocks in the S&P 500. Last year, it rose 239%. Its market capitalization has increased by about $490 billion this year alone.
Original title:Nvidia’s High-Stakes Earnings Moment Has Entire Market on Edge(excerpt)