Nvidia Delivers But Doesn’t Blow Wall Street's Doors Off
Here's what I expect for the stock after solid numbers that beat the forecasts, but were not as high as hoped.
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The market inched higher again on Wednesday with small-caps leading. The Russell 2000 ETF IWM was up 0.7% and is at its highest level since December 2024. Breadth was solid, and there were around 240 new 12-month highs.
The Magnificent Seven MAGS names were mixed as investors impatiently awaited earnings results from the Big Kahuna known as Nvidia NVDA. The stock ended the regular session nearly unchanged as investors struggled to figure out if the numbers would be good enough to avoid a sell-the-news reaction.
The Nvidia report shows beats on both the top and bottom lines, but the beat is smaller than hoped, and the stock is trading lower initially. EPS was $1.05 vs. the $1.01 Wall Street consensus, and revenues were $46.74 billion vs. the $46.05 billion consensus. Third-quarter revenues are anticipated to be $52.92 billion-55.08 billion compared to the $53.43 billion consensus.
These are solid numbers that beat the forecasts, but they aren’t as high as hoped. The stock is coming back after the initial dip, but now the important issue will be the comments on the conference call.
As I discussed earlier, Nvidia has an attractive valuation, and it is unlikely it is going to see much of a sell-the-news reaction even if the beat isn’t that great. There are plenty of buyers who are anxious to buy pullbacks, and the fact that the beat wasn’t a little bigger isn’t going to discourage them.
I expect to see analysts reiterate their buy recommendations and move their price targets up once again.
The bigger issue is whether Nvidia will help to keep the overall market momentum going. Given the reaction so far, it looks likely that the bulls are going to stick around.
Have a good evening. I’ll see you Thursday.
At the time of publication, Rev Shark was long NVDA.
