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Shares of the most valuable chip company had briefly scaled a
record high in the previous session, but ended 2.8% lower as
overall markets slipped.
As investors up their bets on the company that virtually makes
all chips used in generative AI such as ChatGPT, its stock has
surged 13% in the past week and tripled in value so far this
year.
"A lot is riding on these numbers, with the shares surging to
fresh record highs ahead of their release," said AJ Bell
investment director Russ Mould.
"Given much of the gains made by equities in 2023 have been
centered on Nvidia and the whole AI story, they are likely to
have a significant impact on the wider market too."
Nvidia's stellar outlook in the previous quarter lifted the chip
firm to a $1 trillion market value in May and set off a rally in
the S&P 500 technology sector, which surged 8% in the five
sessions after its results.
Options data showed the stock could swing nearly 11% by Friday,
larger than the 8.6% average move in either direction seen a day
after Nvidia's results over the last eight quarters. It will
still be below the 24.4% jump after the last earnings report.
Nvidia is part of the so-called Magnificent Seven group of
megacap stocks including Apple and Tesla that have powered the
S&P 500's 14.3% rise this year.
Investors expect upbeat results from Nvidia, whose shares are
the top performer on S&P 500 this year, to revive a stocks rally
that has struggled in recent weeks.
The stock's surge has pushed its valuation multiple to nearly 43
times the consensus earnings for the next 12 months, just below
its three-year average of 45, according to Refinitiv data.
Wall Street expects the chip designer to report 112.6% jump in
third-quarter revenue to $12.61 billion. Investors will be
looking at sales at Nvidia's data center unit, home to its
prized H100 chip used in AI.
"Anything less than absolutely fantastic could trigger a sharp
downside correction in Nvidia's stock price," said Ipek
Ozkardeskaya, senior analyst at Swissquote Bank.
(Reporting by Medha Singh in Bengaluru; Editing by Arun Koyyur)
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