The investment world is on the edge of its collective seat, awaiting what will happen when releases earnings today. It’s an important event because Big Tech appears to be on the verge of a tipping point. Will the market rotate away from Big Tech or toward it? We think that Nvidia’s earnings will answer that question.
The reason for this is that when Nvidia reports, it offers up cold, hard numbers about sales, which in turn inform demand, margins, and forecasts. Unlike the imagined possibilities of AI, these figures also inform the demand, margins, and outlook for major suppliers in the AI ecosystem that are strategically linked to Nvidia.
These companies include , , , and . Bullish sentiment surrounding these names could sustain the momentum in Big Tech.
As of this moment, the sentiment favors a robust earnings report for NVDA. Four of the major brokerages, Morgan Stanley, Key Bank, Susquehanna, and UBS have raised their earnings targets ahead of today’s earnings report. Say what you will about the buy and sell ratings of analysts and their timeliness, but one thing analysts tend to get right is their earnings forecasts. The reason for this is that there are numerous data points available that they can use to corroborate their estimates.
Although Street sentiment suggests NVDA earnings are poised to beat, the accrual numbers it reports may still be confusing, making it difficult for investors to discern the actual trajectory of the company. Specifically, the Trump administration revoked its prior ban on the sale of Nvidia’s chips to China.
Now, sales are allowed, but only for certain types of chips, and NVDA must now pay the government a 15% cut of its sales in China. The way in which NVDA accounts for these changes, and in particular how it reports its forecast, i.e., its “guidance,” could be 1) more conservative, 2) lower, or 3) both.
This sets up the typical conundrum investors face when buying equities. In the short term, the markets are erratic. Long-term markets are rational. While putting all your eggs in one basket with a superstar like NVDA could work out, for most investors, the tried-and-true formula works best: invest for the long term and hold a diversified portfolio.
We have Morgan Stanley, Key Bank, and Susquehanna. They raised their price targets ahead of the earnings announcement. One went to overweight, two 15, and the other one went to two 10. Some nice upside left, and I’m not done. UBS raises their price target on Nvidia ahead of the earnings.
They say everything looks strong for them and they raise their price Target. It’s a 2 0 5, so it seems like 2 0 5 is the sweet spot. NVIDIA’s been trying to, that he’s age 20 chips that they weren’t supposed to sell anymore. Then they got, oh yeah, you can sell ’em, but you need a license to do it. They just decided, you know what, we’ll just make a new chip. It’s called the B three zero A B 30 A to replace the H 20.