Tech Stocks Slump Ahead of Nvidia Earnings Report
Tech stocks experienced a slump on Wednesday as investors eagerly awaited the quarterly earnings report from Nvidia. This report is considered by many to be the most significant stock-market event of the year. As a result, the Magnificent Seven stocks, including Nvidia, Microsoft, Alphabet, and Amazon, all traded in the red Wednesday afternoon.
Nvidia, in particular, saw its shares drop by as much as 4.4% at one point, although it managed to recover slightly by 1:30 p.m. ET. Other tech giants like Tesla, Apple, and Meta also experienced declines of less than 1%. Chip stocks were not exempt from the slump either, with the PHLX Semiconductor Index falling about 2%, and industry leaders Broadcom and Advanced Micro Devices declining 1.8% and 2.3%, respectively. The tech-heavy Nasdaq Composite led the major indexes lower, dropping more than 1%.
The anticipation surrounding Nvidia’s earnings report stems from the high expectations set by Wedbush Securities analysts, who believe this could be the most important tech earnings in years. Analysts predict that Nvidia will report doubled revenue and profit for the last quarter, thanks to increased spending on artificial intelligence infrastructure by tech companies.
Nvidia’s stock has historically experienced significant gains following its earnings reports, which has had a positive impact on the overall stock market. Investors are hopeful that another blowout quarterly earnings report will reignite the tech rally that has propelled stocks to record highs this year.
However, Nvidia’s stock has faced challenges in recent months. It experienced a significant drop of over 25% in July and early August due to shifting interest-rate expectations. Although the stock has since rebounded, it remains more than 7% below its all-time high. In comparison, the S&P 500 traded about 1% below its record high on Wednesday.
Analysts are closely watching for any updates on Nvidia’s next-generation Blackwell system, as reported delays could have a modest impact on quarterly results and the near-term outlook. However, some analysts believe the impact may be negligible enough that executives may not even acknowledge tactical setbacks.
Despite these potential setbacks, analysts remain overwhelmingly bullish on Nvidia’s long-term prospects. Of the 61 analysts who have rated the stock, 47 have given it a buy rating, the highest possible rating. Nine analysts have rated it overweight, and five have rated it neutral. Notably, no Wall Street analyst currently has a negative outlook on Nvidia stock.
In conclusion, the tech industry eagerly awaits Nvidia’s quarterly earnings report, which is expected to have a significant impact on the stock market. The slump in tech stocks ahead of the report reflects the high stakes involved. Investors hope that Nvidia’s strong performance will reignite the tech rally and push stocks to new heights. Despite potential setbacks, analysts remain optimistic about Nvidia’s long-term prospects, further bolstering investor confidence in the company.
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