Can Nvidia (NVDA) Stock Keep the Streak Alive?

If there’s one stock that’s captured the most attention from investors and media alike in 2024, it has to be Nvidia (NVDA) stock. So far, shares are up over 180% this year on artificial inteligence enthusiasm and blockbuster growth. And that’s after a BIG pullback. Needless to say, Nvidia’s investors should be very happy. But will the company give them reason to keep smiling when it reports earnings after the market closes? Will Nvidia beat earnings expectations one more time and keep the streak alive and the profits rolling in?

So far, it’s been a losing wager to bet against Jensen Huang and his chip-making juggernaut. Every one of the past four quarters has seen the company more than double its revenues and beat even the lofty earnings expectations analysts keep setting. So there’s a very good chance we see tradition continue as Nvidia beats earnings one more time. But there are more reasons than just a gut feeling about history repeating. And I think you’ll agree they give a pretty definitive answer to the question of the day: Will Nvidia beat earnings once again?

Will Nvidia Beat Earnings? Analysts Think So

There are still a few naysayers out there who are betting Nvidia can’t keep growing sales and profits like it has the past year. But they’re in the extreme minority. We’re talking about six analysts of the nearly 40 that cover Nvidia (NVDA) stock. The rest of them are so confident that Nvidia is going to beat earnings that they’re practically in a race to boost their estimates for both earnings and revenues. In the three months since Nvidia last reported earnings, 29 analysts have boosted both their profit and sales targets.

And there’s this thing about stocks that experience lots of earnings revisions. As you can see from the chart above, the stock price tends to go in the same direction as the revisions. And companies that get more positive revisions outperform the market almost every single time. So with almost all of the analysts who know Nvidia (NVDA) stock inside and out betting on BIG growth, it’s probably a pretty safe bet that Jensen and co. deliver just that. But there’s another reason to think that Nvidia will beat earnings…

Will Nvidia Beat Earnings With Blackwell Delayed?

You see, analysts are excited about Nvidia (NVDA) stock. And they’re boosting their estimates of how good it’ll do left and right. But they’re still being conservative with those sales and profit numbers. And that’s because earlier this quarter, the company announced a delay in shipments of its latest processor. The new Blackwell units are the latest and greatest and best chips in the world for processing the vast amounts of data AI relies upon. So far, the company hasn’t commented on the delay, but the following customers have reported that their orders are now expected a few months later:

• Super Micro Computer Inc. (NASDAQ: SMCI)
  
  
• Meta Platforms Inc. (NASDAQ: META)
  
  
• Google parent Alphabet Inc. (NASDAQ: GOOG)
  
  
• Microsoft Corporation (NASDAQ: MSFT)

Will Nvidia Beat Earnings? You’d Best Hope So

So it’s obvious that I and a lot of other analysts think Nvidia is very capable of beating earnings. But now you might be wondering why one earnings report deserves this much coverage. There’s a very good reason. And it’s twofold. First, Nvidia is the second-biggest company in the world. With a market cap north of $3.1 TRILLION, only Apple is bigger, at $3.45 trillion. And both the Nasdaq Composite and the S&P 500 are what are known as market cap-weighted averages. That means that the bigger the market cap, the bigger allocation a company gets.

So, now that Nvidia is so big, it’s got an equally huge allocation in those indexes that so many index funds and money managers use as benchmarks. In fact, Nvidia (NVDA) stock makes up over 8% of the Nasdaq and nearly 7% of the S&P 500. And when a stock makes up that much of an index, when that stock moves, so does the whole index. So if I’m wrong and Nvidia doesn‘t beat earnings today, tomorrow is likely to be a rough day for the whole market.

But there’s more to this story. You see, Nvidia is also riding a wave of enthusiasm about the rapid development of AI technology. And that wave of enthusiasm is what’s helped markets defy persistent inflation, tighter financial conditions (or rate hikes), and a slowing economy. In spite of all that, excitement over AI has powered markets to all-time high after all-time high.

And if Nvidia doesn’t beat earnings… or even if it does beat earnings but management doesn’t sound extra excited about the next 12 months… markets might take that as a sign that AI wasn’t as impressive as it seemed and that the wave of growth and profits is over. That would likely send markets into a short-term nosedive, too.

So, as you can see, there’s good reason why even folks who wouldn’t touch Nvidia (NVDA) stock with a 10-foot pole should be rooting for the AI juggernaut to keep its streak of beats and raises going. The whole market may depend on it.

To your wealth,

Jason Williams

@TheReal_JayDubs

Angel Research on Youtube

After graduating Cum Laude in finance and economics, Jason designed and analyzed complex projects for the U.S. Army. He made the jump to the private sector as an investment banking analyst at Morgan Stanley, where he eventually led his own team responsible for billions of dollars in daily trading. Jason left Wall Street to found his own investment office and now shares the strategies he used and the network he built with you. Jason is the founder of Main Street Ventures, a pre-IPO investment newsletter; the founder of Future Giants, a nano cap investing service; and authors The Wealth Advisory income stock newsletter. He is also the managing editor of Wealth Daily. To learn more about Jason, click here.

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