• Loading stock data...
Technology World

Nvidia shares up on hopes of strong results powering another AI rally

Nvidia shares rose about 2% on Wednesday on growing expectations that the chip designer will deliver another strong outlook and boost markets as it reaps the benefits of early investments in artificial intelligence.

Shares of the most valuable chip company, which has been pivotal in driving this year’s stock market rally, briefly scaled a record high in the previous session.

Ahead of its second-quarter results after the closing bell, investors have upped their bets on the company whose high-end chips are used in generative AI such as ChatGPT.

Nvidia’s shares have surged 14% in the past week and tripled in value so far this year.

“It’s not often that the fate of the market rests in the hands of just one stock, but it very much feels like that is what’s going on at the moment,” said JJ Kinahan, chief executive officer of IG North America.

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 U.S. stocks rally that has paused 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 a 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.

“Last quarter’s gargantuan upside surprise probably cannot be repeated as most investors’ expectations for the AI-focused graphics cards maker have ‘priced in perfection’,” said Jake Dollarhide, co-founder of Longbow Asset Management Company.

“Anything below that seemingly unattainable bar could lead to more market turbulence, particularly for the Nasdaq,” he added.

Source : Reuters



About Author

Leave a comment

Your email address will not be published. Required fields are marked *

You may also like


Has the Digital Markets Act got it wrong on app stores?

Apple’s iPhone and Google’s Android mobile operating system dominate the smartphone market. The two companies also control the app stores
Business Technology

How to fix the European Union’s proposed Data Act

The draft European Union Data Act, proposed by the European Commission in February 2022, aims to fill a big gap in