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Key notes ahead of Nvidia’s Q1 2025 earnings - Stock Markets



  • Nvidia’s Q1 2025 earnings to be announced on Wednesday after the market closes
  • Analysts expect triple-digit earnings growth as Nvidia dominates AI industry
  • Profitability metrics, forward guidance, and spending plans will be closely watched
  • Nvidia might initiate another bull run if it renews AI optimism
 

 

AI buzzword fails to boost stocks this season

More than 80% of businesses have already reported their earnings, presenting better-than-expected statements and a rosy guidance for the coming quarters, which came in as a recognition of the upbeat US macro conditions. In contrast to the previous season, the artificial intelligence buzzword was less effective, unable to impress investors and lift stock markets to fresh record highs. AI-linked chip stocks such as Super Micro and Advanced Micro devices could not capitalize after their results fell short of the high expectations.

Instead, investors appeared more sensitive to corporate developments, such as buybacks and dividend increases, as well as to production cost reductions. This partially reflected that traders have likely started to pay attention to financial benefits and seek signs of improved productivity from the widespread adoption of the new technology, although the rewards might take time to clearly emerge.

Nvidia drives Wall Street gains

How the market reacts to Nvidia’s Q1 earnings next Wednesday will indicate whether traders have become more conservative. The California-based company, which became synonymous with the AI revolution, was the tailwind of the stock boom in January, topping its Nasdaq 100 rivals’ year-on-year and becoming the third best performer within the S&P 500 community after losing some ground from Super Micro computer and Vistra corporation recently. In the aftermath of its stock price surge, its market cap of $2.32 trillion surpassed Alphabet’s $2.14 trillion and Amazon’s $1.96 trillion and was almost double Meta platforms’ 1.22 trillion too.

Earnings expected to show triple-digit growth

The question that arises now is whether the high-flying stock will repeat its meteoric rally when its Q1 2025 earnings come out on Wednesday after the market closes. Analysts expect another eye-popping report, with a record-breaking annual revenue growth of 244% and a quarterly increase of 12% to $24.7bln on the back of its data center activities such as AI training and graphic workloads. Likewise, earnings per share (EPS) could jump by a historic annual rate of 411% and register a remarkable quarterly growth rate of 8% to $5.57.

Profitability metrics might keep traders impressed too. Nvidia’s gross profit margin is expected to hit a new peak at 77%, deviating further above the industry’s median. Recall that Super Micro’s and Advanced Micro figures have been below 20% and around 50% respectively on average over the past couple of years. The company’s return on equity (ROE) is also attractive at 90%, the highest within the semiconductor group, which has a mean of -4.63% and a median of 8.98%.

Valuation is high but justified

In terms of valuation, though, Nvidia’s forward 12-month P/E ratio is relatively overstretched at 35x when compared to Nasdaq 100's of 26x and versus rivals’ scores such Intel’s 23x. However, this is not so concerning, as the future looks bright for the king of the AI industry. Wall Street brokers and other key investors believe that the company could further accelerate computing and large language models, consequently raising their price targets above the $1,000 threshold. Recommendation from Refinitiv analysts is "buy".

There are no official dates announced about the next product releases, though rumors suggest that the next generation of faster and memory-enhanced graphic cards RTX 5080 and RTX 5090 will be out before the Christmas-New Year holiday season kicks off or early in 2025. The cost-effective trillion-parameter NVIDIA Blackwell Platform, which Amazon, Dell and Meta are expected to adopt among other important tech companies, could also come to Google cloud early in 2025. Investors might learn more when Nvidia and its rivals such as AMD and Intel present their next key-Gen products during the Hot Chips 2024 talks in August. The event could also be important for Nvidia to study its competition before revealing its new products.

Competition risks

The battle on the AI front might further intensify as new entrants, big and small, are already designing their own alternative products. With demand for the new technology expected to heat up and Nvidia already owning the whole pie with a 70-90% market share, the company might struggle to meet delivery orders, forcing customers to seek substitutes.

Spending plans

Any updates on the pricing structure could be valuable for investors given the volatile commodity prices and the global geopolitical tensions, including a potential worsening US-China trade war. Recall that US regulators have blocked exports of Nvidia and AMD’s high-powered GPUs to China.

A potential stock split announcement could be good news to investors who want to buy the stock at a cheaper price.

Nvidia stock - Levels to watch

As regards the market reaction, an upbeat earnings report accompanied by a rosy forward guidance and signs of early productivity gains or supply shortages could swing global stock markets to the upside. Technically, for that to happen, Nvidia’s stock needs to jump above the $959-$973 wall which halted the record rally in March. If that ceiling cracks, the price could rise exponentially towards the $1,025-$1,050 region, where the tentative ascending line that connects the 2021 and 2023 highs is placed. A steeper increase might hit the 161.8% Fibonacci extension of the previous downfall at $1,100.

Otherwise, if the earnings report is overestimated, and the guidance does not impress investors, the price might seek shelter near the $920 territory and the broken constraining line from April 2023. Slightly lower, the shorter-term ascending line from April’s low could next come to the rescue along the 50-day simple moving average (SMA) near $885. The 23.6% Fibonacci retracement of the November-March uptrend could be the next pivot point near $835.


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अस्वीकरण: XM Group के सत्व केवल निष्पादन वाली सेवा और हमारी ऑनलाइन व्यापार सुविधा में पहुँच प्रदान करते हैं, ताकि व्यक्ति वेबसाइट पर या उसके जरिए उपलब्ध सामग्री को देख सके और/या उसका उपयोग कर सके। इसका प्रयोजन इसे बदलना या विस्तार देना नहीं है, न ही वह इसे बदलता या विस्तार देता है। इस तरह की पहुँच हमेशा ही निम्नलिखित के अधीन रहेगी: (1) नियम और शर्तें; (2) जोखिम चेतावनियाँ; और (3) पूर्ण अस्वीकरण। इसलिए ऐसी जानकारी सामान्य सूचना से अधिक कुछ भी नहीं है। विशेष रूप से, कृपया इससे अवगत रहें कि हमारी ऑनलाइन व्यापार सुविधा की सामग्रियाँ न तो किसी चीज का अनुरोध करती हैं, न ही वित्तीय बाजारों में प्रवेश करने की पेशकश ही करती हैं। किसी भी वित्तीय बाजार में व्यापार करने के साथ आपकी पूँजी को उल्लेखनीय जोखिम है।

हमारी ऑनलाइन व्यापार सुविधा में प्रकाशित सभी सामग्रियाँ शैक्षणिक/सूचनात्मक प्रयोजनों मात्र के लिए हैं, और इनमें वित्तीय, निवेश टैक्स या व्यापार सलाह और सुझाव नहीं हैं - न ही ऐसा समझना चाहिए कि इनमें ये सब हैं; न ही इनमें हमारी व्यापार कीमतों का अभिलेख है; न ही इनमें किसी वित्तीय उपकरण में लेन-देन करने का निमंत्रण या अनुरोध है; न ही ये आपको अवांछित वित्तयी प्रोमोशन पेश करती हैं।

इस वेबसाइट में मौजूद कोई भी तृतीय पक्षीय सामग्री, तथा XM द्वारा तैयार की गई सामग्रियाँ, जैसे: अभिप्राय, समाचार, अनुसंधान, विश्लेषण, कीमतें और अन्य सूचनाएँ या तृतीय पक्षों की साइटों के लिंक, "जैसा-है-वैसा" के आधार पर बाजार के बारे में सामान्य टिप्पणी के रूप में उपलब्ध कराई गई हैं, और वे निवेश हेतु सलाह नहीं हैं। जिस हद तक कीसी सामग्री को निवेश अनुसंधान मान लिया जाता है, उस हद तक आपको ध्यान में रखना होगा और इसे स्वीकार करना होगा कि वह सामग्री इस उद्देश्य से और निवेश अनुसंधान की स्वतंत्रता को बढ़ावा देने के लिए कानूनी आवश्यकताओं के मुताबिक, तैयार नहीं की गई है, और इसलिए उसे प्रासंगिक कानूनों और विनियमों के तहत विपणन संप्रेषण माना जाएगा। कृपया सुनिश्चित करें कि आपने गैर-आश्रित निवेश के बारे में हमारी सूचना को पढ़ और समझ लिया है। पीछे दी गई जानकारी के बारे में अनुसंधान और जोखिम चेतावनी यहाँ उपलब्ध है।

जोखिम की चेतावनी: आपकी पूँजी जोखिम में है। लीवरेज वाले उत्पाद सबके उपयुक्त नहीं होते हैं। कृपया हमारे जोखिम खुलासे पर विचार करें।