Nvidia Earnings Report Could Be a Market-Moving Event: Expert
Nvidia Corporation (NVDA) is set to release its second-quarter earnings report on August 28th, and market strategists are closely watching to see how the results could impact the broader market. With anticipated revenue of $28.46 billion and earnings per share of 64 cents, the company’s performance could be a significant indicator of the overall health of the tech sector.
Key Takeaways:
- Nvidia’s earnings hold significant weight: The company’s performance has historically been a bellwether for the overall market. In 2023, Nvidia’s earnings report triggered a market shift, and its stock price is again being closely watched.
- Nvidia is a market leader: As a top stock with a heavy weighting in major indexes and ETFs, Nvidia’s earnings could impact a wide range of investors.
- Investor caution is warranted: While Nvidia’s long-term prospects remain strong, some market strategists are urging caution ahead of the earnings release.
- Strong long-term prospects: Nvidia continues to be a favorite among investors for its long-term growth potential, with some advocating for a buy-and-hold strategy.
Nvidia’s Performance Could Influence the Entire Market
Nvidia’s earnings report is expected to be a major event for investors and analysts, according to Jay Woods, Chief Global Strategist at Freedom Capital Markets. Woods highlighted Nvidia’s role as a market leader and its ability to significantly move the market based on the outcome of its earnings release.
"We’re seeing consolidation in those Mag 7 names now, and Nvidia was the tell to the market changing last August," stated Woods.
Nvidia’s stock performance following its last earnings report in August 2023 was a key indicator of the market’s direction. The stock gapped up at the open, filled the gap, and closed slightly higher after reporting earnings. In the subsequent months, the stock experienced a decline before eventually breaking out in January 2024.
Woods emphasizes the importance of paying attention to the $140 level for Nvidia’s stock price, a level he believes the stock is unlikely to reach before Wednesday. However, he highlights the potential for a significant market impact depending on the investor reaction to the earnings.
Nvidia’s Impact Extends Beyond its Own Stock
Nvidia’s weightings in major indexes and ETFs underscore its broad market influence. The SPDR S&P 500 ETF Trust (SPY) lists Nvidia as its third-largest holding at 6.5%, while the SPDR Select Technology ETF (XLK) has Nvidia as its second-largest holding at 20.9%, surpassing even Apple Inc (AAPL) in weight.
"You better know that Nvidia is now more important than Apple is," cautioned Woods, emphasizing the heightened importance of the company’s earnings report for a wide range of investors.
A Buy-and-Hold Strategy for Nvidia?
Despite concerns about Nvidia’s momentum ahead of its earnings report, Woods remains bullish on the company’s long-term prospects.
"My best idea is just buy Nvidia and put it away and don’t look at it."
He shared a personal anecdote of his father investing in Nvidia in 2019, demonstrating the potential for significant returns from a buy-and-hold strategy. The example underscores the company’s strong track record and potential for growth over time.
Nvidia’s Earnings Report: A Potential Catalyst for the Market
Nvidia’s earnings report is poised to be a major event for the market, with the potential to trigger significant moves across a range of stocks and sectors. While investor caution is warranted, the company’s long-term prospects and its influence on major indexes and ETFs makes it a crucial stock to watch.
The earnings release will shed light on Nvidia’s performance during a period of economic uncertainty and technological innovation. Investors, analysts, and market strategists alike will be keenly observing the results to gauge the company’s future trajectory and its potential impact on the broader market.
