Daily Brief - A High-Stakes Earnings Call

TLDR: As Nvidia gears up to unveil its Q4 earnings, the tech titan finds itself at the epicenter of Wall Street's gaze, riding the colossal wave of AI-driven market enthusiasm.

According to Visible Alpha, Nvidia is projected to report revenues of $20.5 billion for Q4 2024, with its Data Center segment, buoyed by robust demand for GPUs and AI computing, expected to rake in an eye-watering $16.9 billion.

The company's stock has soared by nearly 400% since January 2023, underscoring the high expectations already baked into its market valuation.

Reuters underscores the critical nature of this earnings release, not just for Nvidia but for the broader market, highlighting Nvidia's pivotal role in the AI-driven rally that has propelled the S&P 500's gains this year. Any deviation could precipitate a significant stock and market retrace.

IG International adds further context, noting Nvidia's shares are trading at a premium against analysts' average price targets, suggesting that to justify its lofty valuation, Nvidia must not only meet but exceed Wall Street's high expectations. Analysts are eyeing a total revenue of $20.322 billion and earnings per share of $4.55 for Q4 2024.

Earnings Update: NVIDIA reports at 4:20 PM ET

Despite historical trends indicating that NVIDIA often experiences a stock price increase following earnings beats, the company observed a 4.25% decline in its stock price in the week succeeding its report of an earnings beat by $0.66 last quarter.

The potential for a similar market response looms should NVIDIA's financial results fail to exceed estimates by a considerable margin, particularly given the company's high valuations.

Discover how other companies could react post earnings with the help of TOGGLE's WhatIF Earnings tool.

Market Movers: When NVIDIA beats earnings?

Here are the best and worst performing chip stocks when NVIDIA beats earnings estimates:

The top 3 performing stocks:

1. Broadcom (AVGO): 1-month return of 8.50%
2. Micron Technology (MU): 1-month return of 6.89%
3. Nvidia (NVDA): 1-month return of 3.10%

The bottom 3 performing stocks:

1. Applied Materials (AMAT): 1-month return of 0.16%
2. Intel (INTC): 1-month return of 0.88%
3. Taiwan Semiconductor Manufacturing Co. (TSM): 1-month return of 2.04%

Asset Spotlight: Technicals for DRAM DXI Index rise

In the 8 past occurrences when technical indicators for the DRAM DXI Index rose, analysis from Toggle indicated a pattern of a median upward movement in Micron Technology's stock price over the next 3 months.

The DRAMeXchange Index (DXI) provides insights into the supply and demand of DRAM (Dynamic Random-Access Memory) products, affecting everything from consumer electronics pricing to the cost of data centers and enterprise computing solutions.