An Nvidia earnings blowout could actually be bad news for the stock, JPMorgan says

NYSE Trader

Lucas Jackson/Reuters

  • Investor expectations for Nvidia’s upcoming earnings report are sky-high.

  • JPMorgan stated Nvidia’s inventory value might negatively react to a blowout earnings report.

  • “The larger the beat,” the extra the market will “suppose that provide is getting higher,” JPMorgan stated.


All eyes can be on Nvidia after the market shut at present as the corporate releases its fourth-quarter earnings report, and investor expectations are sky-high.

And even when Nvidia exceeds investor expectations when it experiences outcomes and steerage, the inventory might see a adverse response, a Wednesday observe from JPMorgan’s buying and selling desk stated.

“If Jensen’s GPU behemoth is ready to report nice numbers, and by ‘nice’ I imply 4Q DC revs north of $20 billion with implied acceleration for Q1 DC,” JPMorgan stated, referring to data-center revenues, “inventory could be tremendous however it’s going to additionally beg the query as as to if or not provide is getting higher.”

Nvidia has been supply-constrained for its H100 GPU chips for months as demand has soared. The provision-demand mismatch was so dangerous over the summer time that Elon Musk stated Tesla could not purchase them quick sufficient.

“We’re utilizing lots of Nvidia {hardware},” Musk stated on Tesla’s second-quarter earnings name. “We’ll really take it as quick as they will ship it to us. Frankly, if they might ship us sufficient GPUs, we’d not want Dojo. However they can not. They have so many shoppers.”

But when provide constraints are beginning to ease, it may very well be a nasty signal for Nvidia, as that might result in a provide glut, which isn’t unusual for the semiconductor business.

“The larger the beat on steerage, the extra the market goes to suppose that provide is getting higher, and that there may very well be a listing correction in 2H24,” JPMorgan stated.

With dangers skewed to the draw back for Nvidia’s inventory following its large surge over the previous 12 months, it seems to be a lose-lose state of affairs for the inventory within the brief time period, with the financial institution saying that Nvidia’s implied transfer of 11% is “undoubtedly greater than scary” if it misses analyst expectations.

“Soooo, dangerous is dangerous, good is ok/dangerous, however too good could be not good,” JPMorgan stated.

Here is what different Wall Road analysts predict from Nvidia’s upcoming earnings report.

Learn the unique article on Enterprise Insider

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