Nvidia (ticker: NVDA), one of the leading chip makers, is set to announce its earnings after the bell on Wednesday. The anticipation surrounding these results is immense, and it's easy to see why. With analysts expecting another remarkable quarter and a positive outlook, Nvidia's stock has been on a tremendous rally, contributing to the buoyancy of the S&P 500 and Nasdaq.
The success of Nvidia can be attributed to its significant role in the artificial intelligence (AI) industry. AI has been one of the most prominent market trends in 2023, and Nvidia's chips have been instrumental in driving growth in this field. Furthermore, there are indications that the AI bubble may continue expanding in the future.
In its previous earnings release in May, Nvidia demonstrated outstanding performance, underscoring the vast potential of AI and resulting in a substantial increase in stock price. This success had a ripple effect that spread positivity throughout the market.
Given these factors, it is no surprise that the upcoming announcement of Nvidia's fiscal Q2 earnings is expected to have a pivotal impact on the performance of the Nasdaq 100 index. Furthermore, this performance is likely to influence global equities as well, making it a significant event to watch closely.
Stay tuned for the latest updates as Nvidia unveils its earnings report, as the outcome will undoubtedly have a profound influence on the wider market.
Nvidia's Potential Impact on Investors
Investors have expressed concerns about whether Nvidia can meet the high expectations placed on the company. With the stock trading at a valuation of 237 times last year's earnings, Nvidia needs to significantly exceed expectations in order to maintain its positive momentum. However, some believe that the growth potential in the field of artificial intelligence (AI) may justify a fundamental reevaluation of Nvidia's valuation based on projected future earnings.
Despite these optimistic viewpoints, Wong, an industry expert, notes that Nvidia now faces a greater challenge compared to its previous earnings release in May 2023. Even a slight disappointment in second-quarter earnings or outlook could potentially trigger a significant negative feedback loop, jeopardizing the current bullish trend of the Nasdaq 100.
In addition to the high expectations, investors also need to consider the outlook for Nvidia's stock based on technical analysis. This approach relies on analyzing trends in market data and prices rather than external factors. Unfortunately, the technical analysis does not paint a positive picture.
According to Wong, the recent price actions of Nvidia signal a potential bearish reversal. Despite reaching a record intraday high of $481.87, the stock was unable to maintain its upward momentum and closed below the key resistance level of $474.10. This bearish trend coincided with the highest trading volumes seen in over a month. Wong suggests that the next critical support level to monitor is $405.95, and based on U.S. premarket trading, Nvidia is expected to open around $460.
While the market sentiment may heavily influence Nvidia's stock movement after earnings, it is crucial to consider the technical analysis aspect as well.