Wall Street is eagerly awaiting Nvidia’s (NVDA.O) latest quarterly results, set to be unveiled on Wednesday. The company’s stock, already nearing record highs, has investors seeking confirmation that the AI chipmaker can sustain its rapid growth and outpace competitors.
These results will be a crucial test for Wall Street’s pick-and-shovels strategy, which has positioned Nvidia as the primary beneficiary of the generative AI boom. Nvidia’s chips are integral to driving advancements in products like OpenAI’s ChatGPT and Google’s Gemini.
“There is a lot riding on Nvidia’s results. It is the most significant stock in the industry,” said Will Rhind, CEO and founder of GraniteShares, an ETF focused on chip stocks.
Since the beginning of 2023, Nvidia’s shares have surged nearly sixfold, making it the third most valuable company on Wall Street with a market valuation exceeding $2.30 trillion. Nvidia’s market value has risen in tandem with the growth of AI-related shares.
According to LSEG data, Nvidia’s 89% stock increase in 2024 has significantly boosted the broader market, and it now represents 5% of the S&P 500 (.SPX). Analyst estimates for Nvidia’s future earnings have climbed even faster than its stock price. As per LSEG data, Nvidia’s stock was trading at around 35 times projected earnings, down from a peak of over 80 last June.
Nvidia’s impressive valuation might still have room to grow. “It is undervalued relative to where forecasts are going,” Rhind noted. Analysts expect Nvidia to report a staggering 242% increase in revenue to $24.60 billion for the fiscal quarter ending in April. For the second quarter, sales are projected to rise by about 97%.
Analysts also predict Nvidia will report first-quarter net income of $12.83 billion, a significant jump from $2.04 billion in the same period last year.
