Nvidia Will Beat Earnings Expectations

Nvidia earnings are coming up Wednesday after the close. NVDA earnings are expected to move the stock, but in what direction, and by how much? Is it too late to buy Nvidia stock, or is Nvidia stock a buy still? I’ll show you why Nvidia will beat earnings expectations, and based upon past Nvidia stock analysis, what I expect the Nvidia stock price to do post earnings. Will Nvidia stock rise, or will NVDA stock fall? This video answers it all.

Nvidia is reporting earnings Wednesday after the close and based upon the earnings of other companies such as ARM, AMD and TSMC, we can have a pretty good idea what Nvidia is going to report for earnings, and more importantly, how the stock is going to react post earnings – whether it’s going to go up or down. I’m Stock Curry, I’m a former Merrill Lynch and Morgan Stanley investment banker, and I have over 25 years of trading experience. And I have found time and time again that if you want to know how a company is going to report earnings, the best way to figure that out is to look at how their competitors and their suppliers have reported earnings.

The best way to figure this out is through TSMC, or Taiwan Semiconductor. Taiwan Semiconductor Manufacturing, ticker TSM, is the sole supplier for Nvidia’s artificial intelligence graphics cards. So because TSMC is the sole supplier for Nvidia’s AI cards, we know that however TSMC reported earnings, is most likely how Nvidia is going to report earnings, especially on the AI side. And after all, Nvidia has been running on AI hype, so the AI chip sales are going to be the most important factor. When TSMC reported earnings most recently, they posted a flat fourth quarter revenue, but they did beat earnings expectations. Revenue in the final three months of last year came in at $20.1 billion, compared to $19.93 billion in the year ago period. Now TSMC did beat earnings expectations, but if you look at the actual revenue and earnings, it was fairly flat, meaning they really didn’t have a great quarter.

But perhaps most importantly, it’s not so much how they did in the past. What we really need to know is how are they going to do in the future? And for this we can look at how the sales have been so far, as well as what their forward guidance was. Well, for December alone, TSMC reported that revenue fell 8.4% year over year, which was also down 14.4% compared with the previous month. TSMC also forecast that their Q4 profit would slide by 23%. So overall, TSMC reported better than expected earnings for their most recent quarter. However, they forecast a significant slowdown for the next quarter.

AMD, one of Nvidia’s competitors, reported the exact same thing. AMD reported fourth quarter earnings that were in line with analyst expectations. And while the semiconductor company’s revenue beat estimates, AMD offered a first quarter forecast that fell short of expectations. As a result, AMD stock slid more than 6% in extended trading. So TSMC and AMD both beat analysts expectations, but both provided a significant slowdown in the next quarter for their forecast, and as a result, both stocks suffered.

However, it wasn’t all bad news for the chipmakers. All we have to do is look at Arm to find a company that fared much better. ARM shares surged 48% after the chip designer issued a strong forecast. But it should be noted that Arm’s chip design technology is mostly used in smartphones and some PCs. Arm also makes most of its money through royalties, where companies pay for access to build Arm compatible chips. Arm isn’t exactly very strong in the AI space. They mostly focus on low end chips that are mostly used in smartphones and some low end PCs. So while the low end part of the market appears to be booming, it’s the high end part of the market – those very expensive AI chips – that appear to be slowing down.

Even with that, Arm is still getting caught up in the AI hype. Arm’s post-earnings pop left the stock trading at an over 100% premium to Nvidia. ARM stock is trading at double the valuation of Nvidia when you look at PE ratios. And actually it was even worse at one point. When ARM traded over $150 a share, the PE ratio exceeded 2,000. Even Zoom could not maintain a PE ratio of over 500 during the 2021 bubble, and this has left ARM’s massively soaring price as proof that AI stocks are in a bubble. You see, Arm’s earnings were good, but their profits actually declined 52%. That left ARM as the latest tech stock to reach a bloated valuation. Since the start of 2023, Nvidia has risen roughly 400%. Social media company Meta Platforms, which was coming off of a bad 2022, but has also been investing into AI as of late, has soared close to 300%. And C3.ai, which provides AI solutions, has seen its valuation drop by 160% since the start of last year, even though its results haven’t really been all that impressive.

And the Magnificent 7 profits now exceed almost every country in the world. The Magnificent 7’s combined market cap alone would make it the second largest country stock exchange in the world. This level of concentration has led some analysts to voice concerns over related risks in the US and the global stock market. The US stock market is rivaling 2000 and 1929 in terms of being the most concentrated in history. And both 1929 and the year 2000 were tops in the stock market, where the stock market fell significantly in the following years, with the Nasdaq down over 80%, and the S&P 500 down over 50%. And currently here in 2024, stocks continue to be the most concentrated they have been since the top of both of those bubbles. This has led a lot of people to be concerned.

So what does this mean for NVDA stock? What does this mean for earnings and the post-earnings reaction? Well Nvidia stock is most likely going to beat earnings expectations just like TSMC, AMD, and ARM did. There is a very good chance that Nvidia is going to beat earnings expectations for this most recent quarter. But when it comes to the forward guidance, Nvidia’s most likely going to show a significant slowdown for Q1. After all, all three chip makers showed a significant slowdown for Q1, and Nvidia should show the same significant slowdown. So the question then becomes, do investors focus on the fact that Nvidia beat earnings and they go out and buy the stock? Or do investors focus on the fact that earnings have probably topped out and they’re going to start going down, and investors go out and sell the stock?

Well, what we saw based upon the other companies that have reported is that these stocks have initially fallen post earnings, but then they rallied in the weeks after. So if Nvidia follows the same trend as AMD and other stocks did, we can expect NVDA to fall post earnings, but rally in the weeks thereafter, meaning we might see a decline for the rest of this week, followed by a rally throughout the month of March.

Now, all of that said, there are some signs that the AI bubble is about to burst. After all, SMCI stock was down almost 20% on Friday alone, and other AI stocks fell as well. So there are some indications that the AI bubble might be about to burst. And once Nvidia reports earnings, if their forward guidance is more focused on, than AI hype is focused on, that could be the top and we could see a significant correction over the next few months. This is what we can expect based upon how the other companies have reported. What do you think Nvidia is going to do post earnings? Let me know in the comments below. I’d love to know your thoughts.

And if you want to know how we’re making money through all of this, I did buy an SMCI put option on Friday, which was up a pretty decent amount. In addition to that, I am also long Tesla. I expect Tesla to start rising here; I think it might have bottomed out. If you want to know everything we’re buying and selling, come join me in the discord. I made over $6,000 in Friday alone, and I post all of my trades in the discord. You can get more information about that here.

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