You may want to take February 21, 2024 off from work.
Why?
The most important company in all of humanity, Nvidia (NVDA) will be reporting earnings after the close of trading! One word from the leader of the King of Chips – Mr. Jensen Huang – may either make or break the broader market for weeks on end.
I know this sounds utterly ridiculous, but it underscores how insane it has become to study and report on this leading AI play. Here is a company that could very well show triple-digit percentage earnings growth in its most recent quarter and it would may be seen as a letdown.
In fact, Nvidia could report triple-digit percentage earnings growth and outline two more quarters of it and it may not be enough for investors that have sent the stock up 55% since the start of 2024.
And I think this concern is being nicely highlighted in a new Bank of America note from veteran chips analyst Vivek Arya that I just stumbled upon in my FriYay inbox.
Here’s what caught my attention from Arya:
“[We] won’t be surprised to see a notable but brief pullback after the recent parabolic run-up in the stock – Bloomberg options indicate ~11% implied move post earnings. Expectations have been steadily moving up, with some bullish buy-side estimates for Nvidia F4Q/1Q report/guided sales at $21.7 billion/$23 billion or 9%/7% above consensus, leaving less room for upside surprises.”
Having said that, Arya is rolling with a buy rating and $800 price target on Nvidia into earnings.
He added:
“However, in our view, any potential mismatch versus bullish expectations is likely supply (memory, packaging) rather than demand or competition related. More importantly, we expect stock volatility to likely be short-lived especially as investors look ahead to Nvidia’s flagship GPU Tech Conference (GTC) scheduled for March 18-21, featuring important pipeline, partner, and AI TAM [total addressable market] updates. As reference Nvidia’s stock was on average 6% higher (vs. SPX up 1%) T+1 days following the last six annual GTC events.”
Just another day in Nvidia hype land, I suppose.
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