Will Nvidia earnings push stock to record high?

Yesterday (Tuesday, August 22^nd), Nvidia’s share prices came within 27 US cents of its highest-ever intraday high of $480.30 registered on July 18^th.

This AI-chipmaker’s earnings due after US markets close today (Wednesday, August 23^rd) may well be the catalyst for an outright new record high for this stock!

 

Here’s what markets are expecting from Nvidia’s Q2 FY24 (3 months ending July 31^st):

• Revenue = US$ 11.04 billion
  (If so, this would be a record high for Nvidia’s quarterly revenue, while also marking a 53.5% quarter-on-quarter jump)
   
• Adjusted net income = US$ 5.2 billion
  (If so, this would be a record high for Nvidia’s quarterly net income, while also marking a 139% quarter-on-quarter surge!)
   
• Adjusted earnings per share (EPS) = US$2.07

 

As for the immediate reaction, the options market currently predicts a single-day move of 10.4%, either up or down, for Nvidia on Thursday (August 24^th) - when US markets re-open the day after this highly-anticipated earnings release.

Of course, whether this sock moves up or down on Thursday and beyond would depend greatly on whether Nvidia can further excite, or disappoint, markets with its numbers from recent past, as well as its outlook for future earnings.

Ultimately, stock markets around the world, from the US to China, are eager to find out whether the AI-boom still has legs to it over the short-term.

If Nvidia can prove later today that the AI-mania is not mere hype, and that the artificial intelligence rush is translating into a sustained tide of incoming revenue and profits, that should easily translate into a new record high for the stock this week.

 

Still, a lot of optimism has already been baked into Nvidia’s stock prices.

In light of the expected spikes for Nvidia’s top and bottom lines, no wonder it’s been the top performing component of the S&P 500 index, with this stock climbing 212.5% so far in 2023!

But this stock’s surge also implies that the bar is set high for a massive upside surprise today.

Recall how this stock exploded higher following Nvidia’s prior earnings release on May 24^th, as markets front-ran the anticipated earnings boost from AI.

Hence, it remains to be seen whether Nvidia has enough to keep stoking the AI-mania, or risk deflating such exuberance and prompt some profit-taking of the stock’s already eye-watering gains.

 

Looking further out …

Over the next 12 months, analysts surveyed by Bloomberg have a median target price of $520.85 for Nvidia shares.

That implies a further 14% in potential gains, from current levels, over the next year.

And it’s not just other US chipmakers that could feel the positive spillovers.

Even tech stocks in Asia could be subject to the ripple effects out of Nvidia’s earnings.

 

Looking at the price charts …

The psychologically-important $480.00 level has proven to be stern resistance of late. However, another positive shocker should easily see $480 resistance conquered.

If the 10.4% projected post-earnings move materialises to the upside, using Tuesday’s closing price as the reference point, that suggests that Nvidia’s shares could even trade above $500 at Thursday’s open!

Already, the largest single position in options are strike calls at $500 expiring on August 25^th!

However, if the 10.4% projected post-earnings move materialises to the downside, Nvidia could begin Thursday’s session closer to the psychologically-important $400 mark.

Nvidia bulls will be hoping that immediate support will arrive via the rising lower trendline that commenced since May’s “gap up” (after its previous quarterly earnings).