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Risk assets remain on shaky ground, ahead of NVIDIA's highly-anticipated quarterly earnings announcement.
At the time of writing:
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Fears of an AI bubble have contributed to the recent slide in US stock markets.
Hence, the latest quarterly results out of the world's most valuable company, and AI poster child no less, may well dictate where US stock markets go from here.
Coming into this month, Nvidia became the first company to ever reach a market cap of US$ 5,000,000,000,000!
However, the market cap of this AI champion has since dropped down to US$ 4.4 trillion as of US market close on Nov 18, with the stock falling 12.4% from its record high on Oct 29..
Ahead of this pivotal announcement, the stock tested support at its 100-day simple moving average (SMA):
Get an in-depth, all-you-need-to-know preview of Nvidia's upcoming earnings @ 2:00 PM GMT today (Wed, Nov 19) in Bybit Learn's "Daily Market Update" livestream - on YouTube and X - with Chief Market Analyst, Han Tan.
1) Fiscal Q3 earnings growth
Analysts currently expect:A miss on any of these headline numbers may sink Nvidia's stocks further, pending what Nvidia conveys about the next two points ...
2) US$500 billion outlook
Nvidia CEO Jensen Huang recently said he expects half-a-trillion dollars in revenue over the next few quarters, thanks to heavy AI capex spending from the likes of Microsoft, Amazon, Alphabet, and Meta - these 4 Big Tech companies account for over 40% of Nvidia's sales.
Can such heavy spending be sustained? Or would Big Tech have to rein in AI spend eventually?
3) AI bubble: real risk or misplaced fears?
There have been questions and criticisms aplenty over the "flywheel" nature of recent mega AI deals - where massive investments from the likes of Nvidia and OpenAI are being questioned for artificially inflating the AI boom.
Microsoft, Amazon, Alphabet, and Meta are forecasted to increase their AI spending collectively by a further 34% over the net 12 months to US$440 billion, according to Bloomberg data.
Ultimately, will all this AI spending pay off?
The market's reactions to these 3 crucial points are bound to sway the share prices of the world's most valuable company.
Markets currently predict that Nvidia's shares could move 6.94% up/down after the earnings.
If so, that should translate into some US$ 300 billion either being added or shaved off Nvidia's market cap.
Such a potentially massive repricing is likely to reverberate across broader US stock markets, potentially also across global equities as well.
NVIDIA's sheer size of US$ 4.4 trillion ensures it has massive influence over major US stock indices:
All that means is, the market's reactions to Nvidia's earnings announcement are bound to sway the broader SP500 and NAS100 as well, given Nvidia's sheer size and weight on these benchmark indices.
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