All Eyes On NVDA

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Three months ago on the afternoon of Wednesday May 24, Nvidia (NVDA) gave surprisingly strong current quarter guidance in conjunction with its earnings report. The guidance for $11 billion in revenue in the current quarter blew away the consensus estimate of about $7 billion. It was based on Artificial Intelligence (AI) reaching a tipping point – CEO Jensen Huang called it an “iPhone moment” – and set off a frenzy among AI stocks. NVDA rallied nearly 60% and the NASDAQ nearly 15% over the next two months before the recent correction. That enthusiasm faces its first test on Wednesday afternoon when NVDA reports earnings (see Charley Grant, “Nvidia Earnings To Give AI Trade First Big Test” [SUBSCRIPTION REQUIRED], WSJ, Monday August 21).

Heading into the report NVDA is now trading for 20 times forward sales estimates and 42 times forward earnings estimates, according to Grant. Analysts are expecting a blowout quarter with revenue of $12.4 billion and $2.08 EPS. “We think any outsize disappointment from Nvidia could really jolt the market”, said Greg Bassuk, CEO of AXS Investments. Get your popcorn ready.

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