Nvidia to Report Q1 Earnings After Bell, Expect Heightened Volatility

James Hyerczyk
Updated: May 22, 2024, 18:48 GMT+00:00

Key Points:

  • Nvidia's upcoming earnings report could cause an 8.7% swing in share price.
  • Nvidia's revenue grows 243% from last year due to high AI chip demand.
  • Nvidia expected to post $5.59 EPS and $24.65 billion revenue
  • AI demand drives Nvidia's success, boosting investor interest in related sectors.
Nvidia Chip

In this article:

Nvidia’s First-Quarter Earnings Anticipate Major Market Moves

Nvidia is set to report its fiscal first-quarter earnings on Wednesday after the bell, with Wall Street eagerly awaiting the results. The chipmaker, renowned for its pivotal role in the artificial intelligence (AI) revolution, is expected to continue its streak of significant revenue growth, which has driven its stock price up by 93% this year alone.

At 17:37 GMT, Nvidia is trading at $945.06, down $8.80 or -0.92%.

Daily NVIDIA Corporation

Expected Financial Performance

Analysts predict Nvidia will post adjusted earnings per share (EPS) of $5.59, with revenue soaring to $24.65 billion. This represents a staggering 243% increase from the same period last year, continuing a trend of over 200% revenue growth seen in the last two quarters. This phenomenal growth has been fueled by the skyrocketing demand for AI chips, particularly from tech giants like Google, Microsoft, Meta, Amazon, and OpenAI.

AI Demand Driving Growth

Nvidia’s current generation of AI GPUs, known as Hopper, has become essential for developing advanced AI applications, including chatbots, translators, and image generators. This high demand has significantly boosted Nvidia’s revenues as top cloud and internet companies invest billions in upgrading their AI infrastructure. However, the launch of Nvidia’s next-generation AI GPUs, Blackwell, might cause a temporary slowdown as some businesses delay purchases in anticipation of the new technology.

Market Volatility Expectations

The upcoming earnings report is anticipated to induce significant market movement. Nvidia’s options imply an 8.7% swing in share price by Friday, equating to a $200 billion shift in market cap, according to Trade Alert data. Although this expected volatility is less than previous quarters, Nvidia remains a crucial player in the AI sector, and any major price changes could influence broader market sentiment.

Broader AI Sector Implications

Investor interest in AI has extended beyond Nvidia to other sectors, including power, commodities, and utilities. BofA strategists project that Nvidia will contribute 9% to the S&P 500 earnings growth over the next 12 months, a decrease from the 37% it drove over the past year. Despite this, the AI theme continues to dominate market narratives.

Short-Term Market Forecast

Given the anticipated earnings and the strong demand for AI technology, Nvidia’s outlook remains bullish. However, the high expectations and potential market volatility underscore the importance of this earnings report. Any significant deviations from expectations could test the resilience of the broader AI trade. Traders should brace for significant price swings, reflecting the high stakes surrounding Nvidia’s performance and its impact on the AI industry.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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