This week, all eyes are on Nvidia's quarterly report. People expect solid numbers, to the point that the S&P 500 index hit another all-time high in anticipation.
It is fair to mention that even risk assets received a boost from news of slowing inflation, which gave hope for an earlier-than-expected Fed rate cut.
In any case, the bulls are once again ruling market sentiment. If there is any chance of changing that sentiment, Mr. Huang's company will have to file a very gloomy report.
Is there any real reason to expect disappointment?
Demand for Nvidia's artificial intelligence chips has skyrocketed, and supply must increase to meet it, so it is difficult to foresee any setbacks.
The outlook also appears to be trouble-free. Analysts are optimistic about Nvidia's upcoming Blackwell chips and predict a 40% price increase compared to current ones.
What is the bottom line?
Nvidia is expected to post earnings of $5.59 per share and quarterly solid revenue growth. Overall, people believe that Nvidia will beat bank estimates on revenue, earnings per share, and gross margins. But the big question is, by how much?
Sales for the first quarter of 2025 are expected to be around $24.610 million; for the second quarter, they're looking at roughly $26.720 million. But it's suspected they'll need sales north of $26.000 million for the first quarter to impress.
What should be kept in mind?
Every rally comes to an end. Companies can't keep growing forever. Luckily for Nvidia, however, there is still plenty of room for growth in the AI market.
So even if prices increase, demand for Nvidia's chips should remain strong. The real question is whether they can maintain their lead in the AI chip market.
For now, however, the market seems quite optimistic. But who knows what the future holds? Let's wait and see what Nvidia's CEO has to say.
As for how overvalued Nvidia stock is?
Let's just say they're not exactly cheap. Nvidia's current P/E ratio is 34, well above the S&P 500. But given Nvidia's earnings growth rate compared to the index, maybe the price isn't so crazy.
But given Nvidia's earnings growth rate compared to the index, maybe the price isn't so crazy. Still, buying before the report drops is a bit like gambling. So, if you're thinking about it, be cautious.
