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According to analysts, Nvidia's earnings have develop into as essential to the US markets as key economic data. The chipmaker is currently preparing to release its quarterly results, which should allow investors to evaluate the state of the factitious intelligence boom.
The benchmark S&P 500 closed 0.6 percent lower on Wednesday and the tech-heavy Nasdaq Composite lost 1.1 percent, ahead of the corporate's second-quarter results due after the market close. Nvidia closed 2.1 percent lower at $125.61.
Nvidia's stock price has risen greater than 160 percent this yr, fueled by a boom in spending on artificial intelligence powered by its chips. Nvidia's stock value is around $3.1 trillion, second only to Apple. Nvidia accounts for about 6 percent of the S&P 500 and greater than 1 / 4 of the benchmark's 18 percent gains this yr.
Nvidia has develop into “one of the crucial essential events within the macro calendar,” with the newest results resulting in market reactions “comparable to those following a surprise US jobs report or the discharge of a consumer price index,” said Deutsche Bank analysts.
The bank noted that the S&P rose 2.1 percent the day after Nvidia released its February results, the second-best one-day performance of the yr. The S&P 500 closed barely higher on Tuesday and near its record high.
One money manager said he couldn’t remember a more eagerly awaited series of corporate earnings. “It's hard to assume that the share price wouldn’t have reacted strongly later within the evening,” he said.
“We consider that is crucial earnings report for the stock market this yr and possibly in years,” Wedbush analyst Dan Ives said in a note to clients on Wednesday.
Global markets were shaken earlier this month after weaker-than-expected US jobs data led to sharp declines in US equity markets.
Morningstar equity strategist Michael Field said Nvidia's earnings could shake up the market. “We're in a tough period. We had the sell-off in August and have recovered quite a bit since then … (but) the Vix is ​​still high,” he said.
The company's results could have implications for other technology stocks as Nvidia has develop into a pioneer of an AI trend that has boosted the market capitalization of U.S. giants comparable to Apple and Microsoft.
JPMorgan analyst Nikolaos Panigirtzoglou said: “We see an image of retail investors being optimistic about technology stocks, while hedge funds and lively equity funds appear more cautious about US technology stocks.”
Ahead of the discharge of Nvidia's report, shares of one in all its largest distributors, Super Micro Computer, fell as much as 24 percent on Wednesday after the corporate announced it could delay its latest annual report. The move followed criticism from well-known short-seller Hindenburg Research on Tuesday.
“Super Micro's management needs additional time to finish its evaluation of the design and operating effectiveness of its internal controls over financial reporting,” Super Micro said.
The company has not responded to Hindenburg's attack, which alleges that Super Micro “faces significant accounting, governance and compliance problems and offers inferior services and products which can be now being displaced by more credible competition.”
When Nvidia releases its latest numbers, analysts expect the corporate to report revenue of $28.7 billion for the quarter, which might double year-over-year.
Still, the U.S. chipmaker faces questions on the extent of reported delays to its next-generation Blackwell chips, while investors are concerned that customers may spend less on AI-related chips.
In May, Nvidia told investors that they’ll expect significant revenue from Blackwell. The chip guarantees to be twice as powerful as the present generation of chips when training latest AI models.
Earlier this month it was announced that as a consequence of production problems, there would likely be a delay in delivery of some variants of the Blackwell series by up to a few months.
Nvidia said on the time that Blackwell was “on the right track to ramp up mass production within the second half of 2024,” while demand for its predecessor, Hopper, remained strong.
Investors have up to now taken the corporate at its word, Morgan Stanley analysts said in an announcement on Monday, and have “largely dismissed concerns” about delays.
“The only caveat is that investor expectations are rising,” the analysts added.
