As Nvidia Corp. (NVDA) gears up to unveil its fiscal third-quarter earnings, the tech titan, crowned as the world’s most valuable company, is at the center of traders’ and investors’ attention. The expectation is set for a potentially strong shift in its stock price, with options markets suggesting a potential 8% move in either direction post-earnings. This translates to a staggering $300 billion swing in market capitalization, which is larger than the total market cap of all but 25 S&P 500 (^GSPC) companies, according to Bloomberg data.
Nvidia’s stock has been on a meteoric rise, up 195% year-to-date, a spike fueled by the artificial intelligence (AI) boom. However, despite its bullish run, the stock is down over 2% ahead of the earnings release scheduled for after the bell, reflecting some market jitters. The primary source of this uncertainty? Nvidia’s new Blackwell chip line.
The Blackwell chips — advanced GPUs with ‘only’ 208 billion transistors designed to boost performance for large language models (LLMs) — are expected to be Nvidia’s next major leap in AI computing. However, their rollout has introduced a new layer of unpredictability. Nvidia has hinted that these chips could add several billion dollars to the fiscal fourth-quarter revenue, with CEO Jensen Huang describing the demand as “insane.” However, production hiccups have complicated forecasts regarding supply, which has always been a challenge for Nvidia but now more so with Blackwell.
Analysts are split on the outcomes. Dan Eye from Fort Pitt Capital Group highlighted the unpredictability around Blackwell’s production capacity, suggesting that while CEO Huang has built significant credibility, the expectations for Nvidia’s future guidance are sky-high. The consensus for Nvidia’s fiscal fourth-quarter revenue is pegged at $37.1 billion, but the variance in projections is notably wide, with estimates spanning over $7 billion, as per Bloomberg’s compilation.
This variance stems from differing expectations about the transition from the current Hopper chips to the new Blackwell series. Some analysts, like Morgan Stanley’s (MS) Joseph Moore, predict a cautious approach in Nvidia’s guidance, possibly hinting at only a slight uptick from consensus estimates. This ‘transitional’ quarter, as Moore calls it, might see customers holding off on purchases of Hopper chips in anticipation of the Blackwell’s arrival.
The implications of Nvidia’s earnings are not just significant for the company but are seen as a bellwether for the broader tech sector, particularly in how it pertains to AI development. With Nvidia’s performance – as noted by BofA (BAC) strategists – potentially influencing market sentiment more than pivotal economic announcements like the next Federal Reserve meeting or inflation data, all eyes will be on how Nvidia navigates this transition to its new technology.
As Nvidia prepares to report, the market braces for impact, aware that the outcomes could either validate the AI frenzy or introduce a sobering pause in the tech sector’s relentless march forward.
Price Action: At last check, Nvidia shares were down 2.12%, trading at $143.89.
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