Nvidia is expected to beat earnings for the 13th time in 14 quarters

Good morning, investors. Nvidia reports earnings today which means we’re back to Wall Street’s quarterly Super Bowl. As much as the bond market, Iran conflict, or the White House might draw attention, there is a clear cut headliner for stock market investors.

The whole world expects Nvidia to report record earnings but the stock has sold off into the news anyway. 

Before rebounding Tuesday, the stock had declined seven trading sessions in a row for its longest losing streak since 2022. While it’s still up more than 12% this year, it’s hovering 11% below its all-time high ahead of Wednesday quarterly results.   

Nvidia has entered five of its last 16 earnings dates on a worse five-day run and five on a deeper drawdown.

Meanwhile, its median distance below a record high ahead of earnings is about 6.5%.  

One contributor to the recent weakness was the Bloomberg report earlier this week detailing how Nvidia is telling customers to expect AI service prices to increase more than 15% due to rising memory costs. 

It’s true that this raises questions about future margins and financing risk, but zooming out to revenue and operating profit numbers provide useful context of just how dominant Nvidia has been since the launch of ChatGPT in November 2022.

Indeed, Nvidia has cleared the midpoint of its own revenue guidance for 15 quarters in a row. It’s beaten consensus earnings estimates in 12 of the last 13 quarters.

Analyst estimates see the company reporting between $2.05 and $2.13 a share in the latest quarter, and not one Wall Street forecast has been cut over the last four weeks. 

Price targets for the stock mostly sit above $300 a share, suggesting more than 41% upside from Tuesday’s closing price.

Should Nvidia report $92 billion in revenue for the quarter as expected, it would mark nearly a 100% increase from a year ago and a jump from last quarter’s $81.6 billion. 

Nvidia reports after the closing bell today. 

One ticker for the supply side of the AI power buildout. CAPA seeks to track the BITA AI Capacitors Leaders Index, the companies making the capacitors, substrates, and power components inside AI infrastructure.

The next AI bottleneck is now tradable with CAPA ⚡

🎯 Canada announced $20 billion in retaliatory tariffs on US goods. Prime Minister Mark Carney’s package targets steel, dairy, appliances, agricultural equipment and electronics and takes effect September 8. (Reuters)

🛢 Iran signaled to Oman that it could close the Strait of Hormuz to Israel-bound oil. The warning revived the geopolitical premium in crude and threatens tanker routes serving roughly a fifth of global seaborne oil. (CNBC)

🤖 AMD stock could soar 40% higher as investors reposition around Nvidia’s earnings. The chip giant is being pitched as the value play on the AI trade with room to close the valuation gap on data-center chips. (Yahoo Finance)

Bilal Little is the global ETF strategist for Direxion ETFs and the host of the ETF Central podcast for the New York Stock Exchange. We sat down to discuss how the market is mispricing the cost of capital, leverage and inverse ETFs, dividend and income products, and the current state of the AI boom.

🗓 August 26, 1983: Berkshire Hathaway stock closed above $1,000 per share for the first time ever.

💡If you find this newsletter valuable, you can help shape its future by taking our 2-minute reader survey. Your feedback directly influences our content.

Investing involves risk, including possible loss of principal. The Fund is new with a limited operating history.