Investing.com — Nvidia’s quarterly results arrive at a delicate moment for the stock, but more importantly for a market that is still heavily reliant on the AI trade.
Narrow breadth remains a defining feature of the S&P 500, with gains concentrated in a handful of mega-cap leaders, and the rally’s durability now hinges on whether the chipmaker can clear expectations that have risen steadily into the print.
Recent pullbacks across the index reflect both the scale of earlier advances and the market’s sensitivity to any wobble in AI sentiment, placing even more weight on what Nvidia signals about demand through year-end.
Expectations are high but more measured than the blowout beats seen in 2024. Several trading desks still rate positioning in the name at 7 or 8 out of 10, and options imply a roughly 7% post-earnings swing.
That would translate to a potential $320 billion move in market value, the largest post-earnings shift ever for the AI leader, underscoring Nvidia’s outsized impact on the broader benchmark.
With the company valued at about $4.6 trillion, even a modest deviation from forecasts could meaningfully sway the S&P 500’s trajectory.
Nvidia (NASDAQ:NVDA) stock has been moving lower into earnings as many believe that the risk skew is tilted to the downside. AI euphoria has been consolidating in recent weeks, raising the bar for an upside surprise.
A beat may not be enough to drive material outperformance, while a miss could be punished sharply.
Sell-side consensus expects Q3 EPS of $1.25 on revenue of $55.03 billion and Q4 EPS of $1.43 on $61.8 billion in sales. But Mizuho TMT specialist Jordan Klein notes that buy-side “whisper” numbers sit closer to $57 billion for Q3 and $64 billion for Q4. Hence, anything else will move the stock lower.
Stifel’s Ruben Roy said that “supplyside factors remain the main risks to the stock.”
Still, demand indicators remain strong. DA Davidson analyst Gil Luria believes that Nvidia will deliver “yet another quarter of results that will highlight the overwhelming demand for AI compute that we expect to continue far into the foreseeable future.”
“NVIDIA remains incredibly well positioned to benefit in this compute environment despite rapidly growing competition, and while competitors may take some market share over time, we believe the market is growing fast enough that it is of no real detriment to NVIDIA,” he wrote in a client note.
Similarly, Roy noted that, according to his conversations and recent industry data points, “AI compute demand is likely to scale higher. We continue to view NVDA as best positioned to benefit,” he added.