Nvidia earnings now rival US jobs report for economic impact

Nvidia’s earnings have become as important for US markets as key economic data, according to analysts, as the chipmaker prepares to announce quarterly results that will allow investors to gauge the health of the artificial intelligence boom.
Futures tracking the S&P 500 and the Nasdaq Composite were steady on Wednesday, ahead of the company’s second-quarter results due after the market’s close, while the Stoxx Europe 600 was up 0.5 per cent.
Nvidia’s share price has surged 160 per cent this year, propelled by a boom in spending on AI, which its chips power, and now has a $3.1 trillion (€2.8 trillion) market value, surpassed only by Apple. It accounts for about 6 per cent of the S&P 500 and more than a quarter of the benchmark’s 18 per cent gains this year.
Nvidia has become “one of the most important events on the macro calendar”, with recent results leading to market reactions “that rival the sort of moves taking place after a surprise US jobs report or consumer prices index release”, said analysts at Deutsche Bank.
The bank noted that the S&P rose 2.1 per cent the day after Nvidia’s results in February, its second-best daily performance of the year. The S&P 500 closed marginally higher on Tuesday, close to its record high.
One asset manager said that he could not recall a set of corporate earnings that had been more “keenly awaited”. “It’s hard to imagine the share price not reacting strongly later this evening,” he said.
Global markets were jolted at the start of the month after weaker-than-expected US jobs data triggered sharp falls for US stock markets.
Morningstar equity strategist Michael Field said that Nvidia’s earnings could send shock waves through the market. “We’re in a precarious period. We had the sell-off in August and have pretty much recovered since…[but] Vix is still elevated,” he said.
The company’s results will have implications for other tech stocks given that Nvidia has become the bellwether of an AI trend that has pushed up the market capitalisation of US giants including Apple and Microsoft.
JPMorgan analyst Nikolaos Panigirtzoglou said: “We detect a picture of retail investor tech bullishness, while hedge funds and active equity mutual funds appear more cautious on US tech.”
Analysts expect Nvidia to report $28.7 billion in revenue for the quarter, which would represent a doubling year-on-year.
Yet the US chipmaker is facing questions around the extent of reported delays to its next-generation Blackwell chips, while investors are also cautious customers could slow their spending on AI-related chips. – Copyright The Financial Times