Nov 21, 2023

Chipmaker Nvidia releases its latest earnings and will likely drive the overall market. 

NVDA – Daily Chart

NVDA – Daily Chart 

NVDA surged in November, and at $498.76, it is near the all-time highs set in August. The earnings will decide whether the stock and the tech sector can continue to climb. 

Nvidia’s earnings release will occur on Tuesday after the US market closes. Futures traders may want to be present when the release is made, as it will be a significant driver of the Nasdaq index

The company’s last earnings report in May solidified its dominance in AI chipmaking, and a stronger number will show that AI is moving faster at customer firms. 

Despite some export restrictions to China and tighter supply, analysts expect Nvidia to report solid results and guidance above consensus expectations. Demand for chips, estimated at $2.5 billion – $3 billion in the second half, will drive this.  

Keybank’s John Vinh expects a small near-term impact from the updated China export restrictions, which Nvidia should be able to offset with the RoW backlog. If its products do not perform well, the analyst expects the company to develop compliant GPUs for China. The new export controls are likely a headwind that Vinh estimates to be ~20%, which will likely be conservative given the outsized demand for generative AI.

The analyst sees $82 billion in FY25 Data Center revenue vs. $101 billion prior and total payment and EPS of $96.8 billion and $20.84. His revenue and earnings estimates are $17.0 billion and $3.57 vs. consensus of $16.2 billion and $3.37.  

The company has hinted in previous earnings releases that it needs to catch up with demand. At the same time, its data centres business is also in high demand. If the numbers come in weaker, it will likely force a pullback in the price of Nvidia and the overall tech market. The numbers after the close on Tuesday will significantly impact where stocks end up this week.

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