:max_bytes(150000):strip_icc()/GettyImages-2196125223-170a32e11c7445eea1fff0c7437f4738.jpg "Nvidia’s Earnings Report Arrives Tonight and Its Stock Is Rising Ahead of the News")
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Key Takeaways
- Investors have lately been a bit sour on tech stocks, but not today: The tech-focused Nasdaq is in the green, and shares of Nvidia are more than 2% higher ahead of the highly anticipated release of the chip giant’s earnings report.
- Nvidia stock has slumped in recent weeks but is still up nearly 40% since the start of the year, substantially outpacing the S&P 500 and making it the second-best performer among Magnificent 7 stocks.
Nvidia shares are showing signs of life on a critical day for financial markets.
The stock was up 2% recently ahead of the release of Nvidia’s (NVDA) quarterly results after the closing bell, the most highly anticipated event of the earnings reporting season. Coming into today’s session, the stock had lost nearly 15% of its value since hitting a record high in late October. But it’s still up nearly 40% for the year, roughly three times the gain of the S&P 500 and trailing only Google parent Alphabet (GOOG, GOOGL) in the Magnificent 7.
Hyperbolizing about the importance of Nvidia’s quarterly results has become a bit of investor vogue lately. Will they determine the future of the company—currently the world’s most-valuable—all humanity, or just the AI trade? Whatever the case, the numbers will be closely watched and the insta-analysis plentiful.
Why This Matters to Investors
There aren’t many stocks out there that capture broader attention in the way Nvidia does. That’s not just because it’s been a powerful gainer, but also because of its substantial weight in the benchmark S&P 500, which means its moves affect the legions whose holdings lean toward low-cost passive investments.
Stocks, and particularly tech stocks, have been under pressure lately, as investors have begun to look for cracks in the argument for ever-higher investment in AI technology and offered up some skepticism about the arguably circular nature of investment in the industry.
“I think people are really gonna need (CEO Jensen Huang) to explain this circular deal mentality, because I don’t think it’s stopping anytime soon,” said Ben Reitzes, Head of Tech Research at Melius Research, in an interview on CNBC Wednesday morning. Reitzes said investors will want to hear more from Huang on his methodology, the kinds of return on investment Nvidia expects and what he sees in AI usage that gives him confidence investments are good ones.
Futures markets indicate that Nvidia’s shares could move dramatically in the days after its report, which—in the near term, at least—could determine the path ahead for stocks. LPL Financial on Wednesday said traders anticipate a move of near 7% in either direction, which would represent its biggest reaction since the fourth quarter of last year.
Some investors have already moved away from the high-powered stock in various forms, making notable portfolio changes before Nvidia’s numbers landed. Softbank recently sold its Nvidia stake, though it said the move was intended to fund investments in OpenAI; Peter Thiel’s hedge fund also sold.
Today, stock investors are seeing some green in their screens after several days of red. The S&P 500, which has lost ground the past four sessions, was up slightly recently. The tech-focused Nasdaq 100 also ticked higher, while the SOX index of semiconductor stocks gained more than 1%. (Here’s our live coverage of today’s trading.)
The winter is generally seen as an upbeat season for markets, but a disappointing report or outlook from Nvidia could mean this year is different.
