Nvidia stock (NVDA) has bounced back, but it looks set to face another test.
The next big event for the market will be the semiconductor industry darling's earnings report, scheduled for after the close of trading on Wednesday.
And it's not just Nvidia's stock price that's at stake: Nvidia's results will set the pace for other AI companies.
“NVIDIA's report and guidance will be absolutely critical for AI infrastructure deals,” tech investor Paul Meeks told Yahoo Finance.
The past few weeks have been a roller coaster for tech investors, as shares of AI giants Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOGL) have all fallen over the past three months, with Alphabet down more than 6% and Amazon and Microsoft both down more than 3%.
And second-tier AI companies are struggling to regain momentum as well: AMD (AMD) is down more than 16% since mid-July, while Marvell Technology (MRVL) is down nearly 6% in the same period.
But Nvidia's strong performance could help reignite some of the lost momentum, according to Wedbush's Dan Ives.
“As the AI revolution takes hold, NVIDIA is the heart and lungs of this bullish tech industry,” Ives told Yahoo Finance.
Ives expects Nvidia to have a “shock and awe” quarter, and said that if demand for the company's chips remains strong, it will have a ripple effect across the industry. In a recent client note, Ives estimated that every $1 spent on Nvidia's GPU chips could generate an $8 to $10 boost across the tech industry.
Mark Shmulik of Bernstein, who works with many of Nvidia's major clients, including Meta, Amazon and Google, told me that the semiconductor giant's performance will be a key driver of big tech companies' next moves.
“NVIDIA is a bellwether for the Magnificent Seven and the AI industry,” Shmulik explained. “Any softness might give them a little bit of momentum to move out of the Magnificent Seven, but when you look at the earnings of other tech companies, their core fundamentals remain strong.”
NVIDIA shares have been soaring so far this year, with shares up 180% in the past year and nearly 2,900% in the past five, setting a very high revenue bar for this quarter.
Nvidia's revenue is expected to grow 112% in the latest quarter, a dramatic slowdown from more than 250% growth a year ago. On Wall Street, the consensus remains bullish, with KeyBanc, Citi and Goldman Sachs all reiterating buy recommendations on the stock this week ahead of the company's earnings release.
Time will tell if Nvidia can live up to expectations in its financial results this quarter, but it's fair to say the stakes are high.
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Shauna Smith is an anchor for Yahoo Finance. Follow Smith on Twitter. TranslatorHave a tip on a deal, merger, activist situation or anything else? Email me at [email protected].
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