Investors’ attention is focused on the announcement of U.S. semiconductor company NVIDIA‘s third quarter earnings (August-October) on the 21st (Korean time).
Nvidia’s stock price is expected to become a measure of overall investment sentiment for technology and AI-related stocks as it maintains the number one position in global market capitalization and is influencing the New York Stock Exchange and the Philadelphia Semiconductor Index.
On the 15th, the New York stock market plunged due to the volume of profit taking from the ‘Trump trade’, which has led the market since the US presidential election, and remarks by US Federal Reserve Chairman Jerome Powell, who suggested controlling the pace of interest rate cuts. The Dow Jones Industrial Average fell 0.70%, the Standard & Poor’s (S&P) 500 Index fell 1.32%, and the Nasdaq Composite Index, centered on technology stocks, fell 2.24%.
Nvidia’s plunge of 3.25% led to a sharp decline in other semiconductor and AI-related stocks. The Philadelphia Semiconductor Index also plunged 3.42%.
“The market is looking for direction,” said Garrett Melson, investment strategist at Natixis Investment Managers, a global asset manager. “I do it,” he said.
However, Nvidia’s ‘surprises’ that exceed market expectations continue, but as the market’s expectations rise, the intensity of the surprises is gradually slowing down.
Sales in the second quarter soared 122% compared to the same period last year, reaching $30 billion (approximately 40.2 trillion won), exceeding Wall Street’s forecast of $28.7 billion compiled by market research firm LSEG by 4.5%.
“It’s getting harder and harder to beat market expectations,” said Mark Rushny, head of investment strategy at asset manager Janey Montgomery Scott.
According to data compiled by LSEG, Nvidia’s third quarter sales are expected to be $33 billion, an increase of more than 80% compared to the same period last year, and net profit is expected to be $18.4 billion.
Last August, NVIDIA announced its second quarter performance and predicted third quarter sales to be $32.5 billion.
Second quarter sales were $30 billion and earnings per share were $0.68, exceeding market forecasts of $28.7 billion and $0.64 compiled by LSEG.
Nevertheless, Nvidia’s stock price fell more than 7% in after-hours trading after the earnings announcement.
With NVIDIA as the last, major U.S. companies conclude their third quarter earnings announcements.
The increase in performance of S&P index companies is led by Big Tech (giant technology companies), including NVIDIA.
Tajiner Dillon, senior analyst at LSEG, predicted that the third quarter profits of the so-called ‘Magnificent 7’ would surge by about 30%, while the remaining 493 companies would see only a 4.3% increase.
“It is the Magnificent 7, led by NVIDIA, that led to the profit growth that supported the stock price rise,” Ruschini said.
The Magnificent 7 refers to the seven major American technology companies, including NVIDIA, Microsoft, Apple, Alphabet (Google’s parent company), Amazon, Meta (Facebook’s parent company), and Tesla.
With the price-to-earnings ratio (PER) of the S&P 500 index exceeding 22 times and approaching its highest level in over three years, there are predictions that Nvidia’s performance could play an important role in supporting the market’s high valuation.
Reporter Kim Hyeon-gyeong [email protected]
