Nvidia earnings can now rival the US jobs report in terms of market impact

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According to analysts, Nvidia's earnings have become as important to the US markets as key economic data. The chipmaker is currently preparing to release its quarterly results, which should allow investors to assess the state of the artificial intelligence boom.

The S&P 500 index was down 1 percent and the technology-heavy Nasdaq Composite lost 1.6 percent on Wednesday before the company was due to announce its second-quarter results after the market closed. Nvidia was down 2.7 percent.

Nvidia's Its stock price has risen more than 150 percent this year, fueled by a boom in spending on artificial intelligence powered by the company's chips. The company's market value is about $3.1 trillion, second only to Apple. The company accounts for about 6 percent of the S&P 500 and more than a quarter of the benchmark's 18 percent gains this year.

Nvidia has become “one of the most important events in the macro calendar,” with the latest results leading to market reactions “comparable to those following a surprise US jobs report or the release of a consumer price index,” said Deutsche Bank analysts.

The bank noted that the S&P rose 2.1 percent the day after Nvidia released its February results, the second-best one-day performance of the year. The S&P 500 closed slightly higher on Tuesday and near its record high.

One money manager said he could not remember a more eagerly awaited series of corporate earnings. “It's hard to imagine that the share price would not have reacted strongly later in the evening,” he said.

“We believe this is the most important earnings report for the stock market this year and possibly in years,” Wedbush analyst Dan Ives said in a note to clients on Wednesday.

Global markets were shaken earlier this month after weaker-than-expected US jobs data triggered sharp declines in US stock markets.

Morningstar equity strategist Michael Field said Nvidia's earnings could shake up the market. “We're in a tricky period. We had the sell-off in August and have recovered pretty well since then…”[but the]“Vix is ​​still elevated,” he said.

The company's results will have implications for other technology stocks as Nvidia has become a pioneer of an AI trend that has boosted the market capitalization of U.S. giants such as Apple and Microsoft.

JPMorgan analyst Nikolaos Panigirtzoglou said: “We see a picture of retail investors being optimistic about technology stocks, while hedge funds and active equity funds appear more cautious about US technology stocks.”

Ahead of the release of Nvidia's report, shares of one of its largest distributors, Super Micro Computer, fell as much as 24 percent on Wednesday after the company announced it would delay its latest annual report. The move followed criticism from well-known short-seller Hindenburg Research on Tuesday.

“It takes more time for [Super Micro’s] “Management is expected to complete its evaluation of the design and operating effectiveness of its internal controls over financial reporting,” Super Micro said.

The company has not responded to Hindenburg's attack, which alleges that Super Micro “faces significant accounting, governance and compliance problems and offers inferior products and services that are now being displaced by more credible competition.”

When Nvidia releases its latest numbers, analysts expect the company to report revenue of $28.7 billion for the quarter, which would double year-over-year.

Still, the U.S. chipmaker faces questions about the extent of reported delays to its next-generation Blackwell chips, while investors are concerned that customers may spend less on AI-related chips.

In May, Nvidia told investors that they can expect significant revenue from Blackwell. The chip promises to be twice as powerful as the current generation of chips when training new AI models.

Earlier this month it was announced that due to production problems, there would likely be a delay in delivery of some variants of the Blackwell series by up to three months.

Nvidia said at the time that Blackwell was “on track to ramp up mass production in the second half of 2024,” while demand for its predecessor, Hopper, remained strong.

Investors have so far taken the company at its word, Morgan Stanley analysts said in a statement on Monday, and have “largely dismissed concerns” about delays.

“The only caveat is that investor expectations are rising,” the analysts added.

Additional reporting by Tim Bradshaw and Jennifer Hughes