Nvidia (NAS100:NVDA) has released its latest earnings this week, just as investors get nervous about tech firms.
NVDA – Daily Chart
The price of NVDA is seeking to hold the support around $180-90. If that level fails, then the stock could be looking at the December 2024 highs near $153.
“After the resolution of the U.S. government shutdown, markets face a packed calendar of delayed and scheduled releases this week. Although maybe the most important event will be Nvidia’s earnings after the closing bell on Wednesday,” said Deutsche Bank’s Jim Reid.
It could be a pivotal week for stocks with economic reports released after the shutdown delay. The headline for that will be Thursday’s September employment report, with Deutsche expecting a rebound in U.S. jobs, with headline and private payrolls both forecast at +75k.
Another big headwind for Nvidia is the news that investor Peter Thiel sold his entire stake in the firm, which had made up approximately 40% of his portfolio. That comes after Japanese firm SoftBank also dumped its entire stake. It’s interesting that both big name investors are getting out of the most important stock over the last two years.
Investor Michael Burry had been vocally critical of AI companies more than a week ago, saying:
“Understating depreciation by extending useful life of assets artificially boosts earnings —one of the more common frauds of the modern era”.
Burry got the market’s attention with big options plays against Nvidia and Palantir.
However, Bank of America analyst Vivek Arya and his team have expressed their own fears for AI stock prices but are bullish overall. Arya goes for a buy rating and a price target of $275, based on the expectation for a 30x price to earnings ratio for 2027, which is inside the historical range of 25 to 56x.
Investors are already on edge with Bitcoin’s move below $95k, and it could be another dent in the bullish outlook if Nvidia’s earnings disappoint. The company has beaten Wall Street analysts’ estimates 90% of the time over the past five years, but averaged only a 6.5% beat from the last four quarters.
Analysts are projecting $54.8 billion in Q3 revenue for Nvidia, which would be a 56% year-over-year growth driven largely by data center demand.
