Earnings season in the US is coming to a close, and all eyes are on Nvidia's next results, which will be released tonight after the market closes.
Despite the stock's incredible recent performance, there is tension in the market, with investors eager to see if Nvidia's impressive 2023 momentum has been sustained into early 2024. The company has been riding the AI wave , and its price has skyrocketed more than 200% in the last year. Wall Street expects Nvidia to post a whopping $24.5 billion in quarterly revenue, which would be a staggering 240% increase from a year ago.
Analysts are predicting a beat-and-rise scenario, with some expecting the company to modestly beat analyst expectations. However, keep in mind that the bar is very high, and another double-digit increase and surpassing could be difficult.
Nvidia is also expected to post quarterly earnings of $5.58 per share, which would be a further increase. Nvidia has beaten its earnings per share in the previous four quarters. Another sign of positive sentiment heading into the release comes from the fact that the consensus EPS estimate for the quarter has been revised up by around 1% over the past 30 days to the current level.
Nvidia's growth continues to be astonishing, placing it as the third most valuable company in the world, reinforced by the rise of AI, which is driving its expansion in various sectors. Despite competition from AMD in graphics processors, Nvidia maintains an 80% market share. However, a further decline in market share could call its growth targets into question.
Analyst opinion remains optimistic, although traditional valuation metrics suggest the stock is highly valued, with a forward P/E of 35. It is also worth noting that, as the third largest company in the S&P 500, with more than 5% of the index, Nvidia's performance can have a significant impact on the broader market.
The stock's fluctuation near $1,000 reflects both media hype and inherent risks, including supply chain issues. However, strong demand for AI chips underpins the positive outlook, affirming the important role of AI in Nvidia's current success.
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