According to CoinDesk, Nvidia's fourth-quarter earnings may trigger a broader correction for equities and crypto if they fail to meet Wall Street expectations. AI-related tokens such as OCEAN and FET could also be affected by Nvidia's earnings and outlook for the sector. Singapore-based QCP Capital stated that Nvidia's performance could set the tone for US equities in the near-term, as it is a major part of the S&P500 Index. The GPU giant, which designs chips essential for the AI revolution, is set to report its earnings on Wednesday after the US market closes. The chip-maker's stock has risen nearly 220% over the last year, and the market will be closely watching the potential for the stock to sustain its rally.
Nvidia is currently trading at a 90x price-to-earnings (P/E) ratio, with Q4 earnings expectations having been adjusted higher recently. In comparison, Amazon.com (AMZN) trades at 52.4x and Tesla (TSLA) at 57.7x P/E ratio, according to FactSet data. QCP Capital warns that any disappointment in earnings could lead to a sell-off, which would put a drag on US equities and crypto prices. AI-related tokens such as Ocean Protocol's OCEAN and Fetch.AI's FET could also see volatile trading sessions following Nvidia's earnings, as the chip maker's outlook on the sector will influence crypto traders' decisions.
Analysts also emphasize the importance of the server industry for Nvidia's growth, as it is at the core of the AI revolution. Data from IDC shows that the global PC market is facing short-term challenges, with shipment volume expected to decline by 13.8% in 2023 after a 16.6% drop in 2022. However, IDC forecasts a rebound starting in 2024, driven by factors such as a commercial PC refresh cycle, AI integration, and recovery of the consumer installed base. Taiwan-based Digitimes Research recently noted that emerging data centers are key to the future of chip companies like Nvidia, boosting server shipments and HPC chip demand. Nvidia's stock is down 7% in the last week and is currently trading around $680, while the majority of Wall Street analysts have a buy rating on the stock with an average 12-month price target of around $751, according to FactSet data.
