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από **Διαχειριστής** 22/2/2024, 02:14

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The AI trade
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Get ready for the big show. The most talked about stock in the financial world is set to report earnings after the closing bell on Wednesday, with big bets taking place before the closely-watched results, outlook and accompanying commentary. Nvidia's (NVDA) impressive returns have not only been limited to the stock, but have been a big force behind the AI frenzy that has helped power the broader market and Magnificent 7 in 2023 and beyond.

By the numbers: Nvidia's consensus EPS estimate for Q4 comes in at $4.63 (+426% Y/Y), with a revenue forecast of $20.5B (+236% Y/Y), up from $6.1B in the prior year. That's a staggering difference, with the AI darling now making nearly as much revenue per quarter as it used to do on an annual basis. Nvidia's stock has reflected these major gains, quadrupling over the past year and up 40% YTD to about $700 per share. It's also led Nvidia to recently become the third largest U.S. company, as well as topping Tesla (TSLA) to become the most popularly traded stock on Wall Street.

If there is any guide to how shares will trade after earnings, keep an eye on forward guidance. If more exponential growth is in store for Nvidia, the stock may continue to rocket, but if there are signs to the contrary, the reaction might be more muted or even go in the other direction. Going into earnings, Nvidia (NVDA) suffered the largest daily loss of market cap in its history, but with a market cap of about $1.7T, even a 4% move can allow those numbers to make headlines. Another item to watch on the earnings conference call will be comments made about trade restrictions, with the U.S. putting sanctions in place on GPUs like the H100, or rising competition from other companies. Check out some commentary from SA analysts below:

Buy: "Nvidia's ability to deliver on promises and exceed expectations, coupled with an unprecedented competitive advantage, means this stock can likely continue rallying despite high valuation risk," SA analyst Christopher Robb writes in Poking Holes In The Nvidia Bear Case: Q4 Pre-Earnings Report. "The mechanism for the Internet crash around the turn of the millennium was valuations getting ahead of earnings. However, the young AI revolution essentially saw the opposite problem for its most fortuitous beneficiaries like Nvidia, so far. Earnings have gotten ahead of valuations in this stock market darling's case." (132 comments)

Sell: "Nvidia's lead times for GPU orders have decreased from 8-11 months to just 3-4 months, indicating a potential future sequential growth peak," Investing Group Leader Paulo Santos notes in Nvidia: UBS Note Should Raise Alarms. "Having ascended to the 3rd largest market cap in the US markets based on discounting ceaseless growth into the future, caution is certainly warranted as there's clear risk this ceaseless (sequential) growth will cease in the near future." (268 comments)

Hold: "Nvidia can be hedged with protective puts quite cheaply now in relation to its stock price," SA analyst A.J. Button explains in Nvidia: Buy Protection Before Earnings. "Although Nvidia has fantastic growth and a wide moat, that doesn't mean the stock is worth, say, $10 trillion. Any series of future cash flows is finite, which means asset prices are finite as well. The question, of course, is where the upper limit of fair value actually resides." (83 comments)

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