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Investor expectations for Nvidia’s upcoming earnings report are sky-high.
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JPMorgan said Nvidia’s stock price could negatively react to a blowout earnings report.
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“The larger the beat,” the more the market will “think that provide is recovering,” JPMorgan said.
All eyes may be on Nvidia after the market close today as the company releases its fourth-quarter earnings report, and investor expectations are sky-high.
And even when Nvidia exceeds investor expectations when it reports results and guidance, the stock could see a negative response, a Wednesday note from JPMorgan’s trading desk said.
“If Jensen’s GPU behemoth is able to report great numbers, and by ‘great’ I mean 4Q DC revs north of $20 billion with implied acceleration for Q1 DC,” JPMorgan said, referring to data-center revenues, “stock is prone to be wonderful however it also needs to beg the query as as as to if or not supply is recovering.”
Nvidia has been supply-constrained for its H100 GPU chips for months as demand has soared. The provision-demand mismatch was so bad over the summer that Elon Musk said Tesla couldn’t buy them fast enough.
“We’re using quite plenty of Nvidia hardware,” Musk said on Tesla’s second-quarter earnings call. “We’ll actually take it as fast as they’ll deliver it to us. Frankly, within the event that they might deliver us enough GPUs, we may not need Dojo. But they can not. They’ve so many purchasers.”
But when supply constraints are starting to ease, it might thoroughly be a foul sign for Nvidia, as that could lead on on to a supply glut, which is able to not be unusual for the semiconductor industry.
“The larger the beat on guidance, the more the market goes to think that provide is recovering, and that there may thoroughly be a list correction in 2H24,” JPMorgan said.
With risks skewed to the downside for Nvidia’s stock following its massive surge over the past yr, it appears to be a lose-lose situation for the stock inside the short term, with the bank saying that Nvidia’s implied move of 11% is “definitely greater than scary” if it misses analyst expectations.
“Soooo, bad is bad, good is wonderful/bad, but too good is prone to be not good,” JPMorgan said.
Here’s what other Wall Street analysts predict from Nvidia’s upcoming earnings report.
Read the unique article on Business Insider