NVIDIA: Expected results and their potential impact on the stock market

There is only one event for today. We are talking about the publication of the company's results, which is identified with the huge boom in artificial intelligence this year. Nivida will publish its results for the second quarter today, which will take place after the close of the session on Wall Street, so the publication will have an impact only after the session, but it can immediately apply to the quotations of futures Nasdaq xnumx or S & P 500.

Important weight of Nvidia in stock indices

In the Nasdaq 100 index, Nvidia has a weight of 4,6% and is the fourth largest company in the index after such companies as Amazon, Microsoft i Apple Lossless Audio CODEC (ALAC),. Thus, Nvidia overtook the finish line or A, have a capitalization of over USD 1 trillion. In turn, in the S&P 500 Nvidia has a weight of 3,15%, which may mean that high volatility after the publication may affect the quotations of entire indices.

Nvidia valuation

The popular P/E ratio for Nvidia's share price rose from 36,7 in October 2022 to 238,4 after yesterday's session. On the other hand, the forward P/E ratio for the next 12 months fell from 69 in May 2023 to 46,5 today. This just shows how much profit growth we are talking about. Hence, the company's share price has increased by 212% since the beginning of the year, creating an ATH in the region of USD 480.

These multipliers seem to suggest growing demand and bulletproof dominance in AI chips. Both factors must be proven. The AI ​​market opportunities are sure to attract more competitors, and these competitors could easily gain traction if Nvidia can't keep up with demand. This may be one of the risk factors for the company in the long term.

CHECK: Nvidia - Learn the history of the company that rules Wall Street and Nasdaq

What to expect from today's publication?

Analysts expect Nvidia to see significant revenue and EPS growth. The consensus estimate for revenue is $11,1 billion, up from $6,7 billion in the prior quarter. This would translate into a 65% increase in sales year on year.

The consensus estimate of revenue is within the company's second-quarter forecasts, which were published in May. At the time, the company expected second-quarter revenue in the range of $10,78 billion to $11,22 billion.

Estimated consensus EPS for the second quarter is USD 2,07, compared to USD 0,51 a year ago. It should be noted that the result of USD 0,51 in last year's quarter was a bit of a surprise, and not a good one at that. The consensus estimate for the quarter was $1,25 but fell to just $0,50. Two weeks before the official release, the company warned Wall Street that revenue and EPS would fall due to weak demand for gaming chips.

When and where will the results be published?

Nvidia will publish a summary of results for the second quarter of fiscal year 2024 on Wednesday, August 23, 2023 at 16:20 PM ET. Visit Nvidia's investor website at this time to read the results summary and CFO Colette Kress' written commentary on quarterly results.

At 17:00 ET, the company will hold a webcast where it will read prepared comments and answer questions from analysts and institutional investors. The webcast will be publicly available in listen-only mode from the company's investor website.

How much volatility does the market expect in Nvidia shares after the results?

According to Nvidia stock option prices, the market seems to be pricing in volatility of around 10%. until the end of the week. With the publication of the latest quarterly results, which were a huge surprise for the market, the share price increased by 24%.