Bloomberg | Stocks Fall Before Nvidia’s High-Stakes AI Results: Markets Wrap
The fact that Nvidia’s stock has experienced a brief reset in recent days heading into its earnings report Wednesday means the stock now has a slightly lower bar to clear post-earnings, according to James Demmert at Main Street Research.
“We expect Nvidia to exceed estimates and provide future earnings and revenue guidance that is higher than investors expect,” he said. “It’s unlikely that Nvidia has seen any slowdown in demand for its products, even with increased competition, given how early we are in the AI cycle.”
Nvidia’s earnings on Wednesday are particularly important given the rising skepticism regarding the longevity of the AI cycle and current AI stock valuations, Demmert noted. Valuations, while expensive, still trade at discounts to earnings growth rates and overall AI market sentiment is mildly bullish and not euphoric, he said.
“The stock market’s recent pullback is a natural reset for a market that had very little volatility in recent months,” he noted. “While it’s unusual to see a market pullback in November, it’s setting us up nicely for a strong December and year-end. We are still very early in the business and AI cycle.”
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