Nivida Results Key Moment for Risk Rally


While the awesome gains of the so-called Magnificent Seven have been the story of the U.S. stock market over the past year, one of those megacap tech and growth stocks has been the main driver: Nvidia. The current stock market darling and titan chipmaker reports quarterly results later today after the US closing bell and this could be seminal occasion for the AI theme and the wider market.

After its stock soared more than 230% in 2023, the tech giant at the centre of the excitement over Artificial Intelligence has seen its shares surge another roughly 50% so far this year. Nvidia has now topped Amazon and Alphabet in market value, making it the third biggest company by market cap (as of February 14). Such mammoth stock gains stand to raise the bar for its results, with any disappointment potentially magnified given Nvidia's growing size in the US major stock indices. The company has the fourth largest weight on both the S&P500 and Nasdaq100, commanding a 4% and 5% weighting on each index respectively.

Regarding the results, Nvidia is expected to report fourth-quarter earnings of $4.56 a share, on revenue of $20.6bn. That would be a startling 240% increase from a year earlier. The big number everyone will be watching is the data centre revenue segment, which includes its AI chips. It is forecast to come in at $17.06bn, a fourfold increase on an annual basis.

Key will be the commentary, guidance and tone around growth rates and the outlook that inspires investors, with analysts expecting roughly 200% y/y growth in the first quarter. There are also question marks around whether there is enough supply from TSMC to meet short-term demand, and what the demand picture looks like further out.

If we look at the options market, the implied or expected move for the day of reporting sits at an impressive -/+11%. That level of implied volatility for a company with a $1.83t market cap could be staggering and have significant implications, not only for Nvidia’s share price but also other AI and mega-cap tech names, plus the indices as a whole. A major move in US equity futures could also impact the USD and risk FX, such as the AUD and CAD. 

Just as a reminder, Nvidia, Microsoft and Meta account for about half of the gains in the entire broad-based S&P 500 so far this year, and together with Apple, Alphabet, Amazon, and a stumbling Tesla, make up over 25% of the index’s entire market cap. Nvidia matters more than it once did as it has contributed more than any other stock to the S&P 500’s rise over the last 12 months, accounting for 15% of the rise.