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Nvidia's Earnings Could Swing $320 Billion — And Set The Tone For The Entire AI Trade

MarketDash Editorial Team
19 days ago
Wall Street is bracing for Nvidia's Q3 results Wednesday, an event that could either revive the AI rally or accelerate the tech selloff. With a potential $320 billion market cap swing on the line, the stakes have never been higher.

Here's a fun fact: when Nvidia Corp. (NVDA) reports earnings Wednesday after the bell, the potential market cap swing is larger than the entire value of nearly all the companies in the S&P 500. Options traders are pricing in a 7% move either way, which translates to about $320 billion in value at risk. That's more than what 475 out of 500 S&P companies are worth individually.

Welcome to the world where one company's quarterly results have become a referendum on the entire artificial intelligence revolution. No pressure, though.

The Bar Is Somewhere In The Stratosphere

Let's talk numbers. Wall Street is expecting earnings per share of $1.25, which would represent a 54% jump from last year. Revenue estimates sit at $54.88 billion, up 71% from the third quarter of 2024. These are the kind of growth rates that would make most companies throw a parade.

But for Nvidia, it might not be enough.

"NVDA near-term is facing the tough task of meeting high expectations and high skepticism around AI capex," said Bank of America's Vivek Arya, who maintains a Buy rating and recently bumped his price target from $235 to $275. Translation: everyone expects amazing things, but they're also wondering whether companies are actually going to keep spending ungodly amounts of money on AI infrastructure.

Arya pointed out that demand clarity and supply chain commentary will be critical this quarter. He emphasized that Nvidia remains unique in its full-stack AI hardware capability, particularly with upcoming product cycles including the Blackwell GB200 and Vera Rubin chipsets. The company isn't just selling chips — it's selling the entire AI kitchen sink.

Goldman Sachs analyst James Schneider is in the bullish camp too, anticipating what Wall Street calls a "beat-and-raise quarter." But he added an important caveat: the stock's reaction will depend heavily on "the level of upside to guidance." In other words, beating expectations by a little might not cut it. Investors want to be wowed.

Key items on the watchlist include updates on Nvidia's $500 billion datacenter revenue outlook, partnerships with OpenAI, the timeline for the Rubin chip ramp in 2026, and any China-related risks that could complicate the picture.

The Technical Picture Looks A Bit Shaky

Not everyone is quite so optimistic about the immediate setup. Jeff Jacobson from 22V Research took a more tactical approach, warning that the market might be mispricing the stock's near-term volatility.

"This implied move looks expensive," Jacobson said, noting that the average post-earnings move across Nvidia's last five reports has been just 3.9%. The 7% move being priced in seems like a lot by comparison.

From a technical standpoint, he's watching $180 as the critical support level. "That level has held since late September, even as other parts of the tech trade have stumbled," he explained. If Nvidia breaks below that zone, it could trigger additional selling, especially given how many trend-following strategies are still active in the market.

Jacobson also raised an interesting question about scale: "With a market cap of over $4.6 trillion, perhaps the days of 10%+ upside moves on earnings are now behind us." When you're already the world's most valuable company, physics starts working against you. Ten percent moves become increasingly difficult when you're talking about moving half a trillion dollars in market value in a single day.

This Isn't Just About One Stock Anymore

"Nvidia's results have become a macro event," said Kenneth Lamont, a principal at Morningstar. That's not hyperbole. The stock is held in nine out of 10 AI and Big Data ETFs globally, which means its earnings carry implications for sentiment and positioning across the entire technology landscape.

Lamont offered a nuanced take on the broader AI debate, cautioning that today's winners could easily become tomorrow's laggards. "Framing the debate as either an AI bubble set to burst or the dawn of a lasting transformation misses the point," he said. "History shows it can be both — the dot-com bust left failures and the seeds of today's tech giants."

That's a smart way to think about it. The internet didn't turn out to be a fad, but plenty of internet companies from 1999 are now footnotes in business school case studies.

Then There's The Seasonal Headwind

Here's something that might surprise you: Nvidia has historically struggled during the late November through December period. According to data from Seasonax, the stock has posted negative returns in seven out of the past 10 years during the stretch from November 19 through December 31, with an average loss of 2.2%.

Looking at the historical record, some years were brutal. In 2021, the stock dropped 10.82% during this period. In 2018, it fell 7.65%. Last year in 2024, it declined 8.65%. But there were also good years sprinkled in — 2019 saw a gain of 13.21%, and 2016 delivered a 9.88% return.

The point isn't that history will repeat itself exactly, but rather that investors should be aware that seasonal patterns don't favor the bulls right now, regardless of how strong the earnings might be.

Wall Street Is Still Raising Targets

Despite all the caution and skepticism, analyst sentiment remains decidedly bullish. The average price target across Wall Street now stands at $230.50, which implies about 27% upside from where the stock closed on November 18. And in just the past month, 12 major firms have raised their targets.

Loop Capital went the most aggressive, hiking its target from $250 all the way to $350 on November 3. Bank of America Securities moved from $235 to $275. Oppenheimer went from $225 to $265. Wells Fargo bumped its target from $220 to $265. The list goes on: Stifel, DA Davidson, Goldman Sachs, Rosenblatt, UBS, Susquehanna, Citigroup, and Morgan Stanley all raised their numbers within the past several weeks.

The highest target now sits at $350 from Loop Capital, while the lowest remains at $100 from Seaport Global. That's quite a range, which tells you something about how uncertain the outlook really is, despite all the bullish talk.

So What Happens Next?

Nvidia's earnings report will do more than determine the trajectory of one stock — it has the potential to reset the entire narrative for the AI sector. But traders face a complicated setup. On one hand, you have massive growth expectations and rising price targets. On the other, you have technical vulnerabilities, seasonal weakness, and growing questions about whether AI capital spending can sustain its current pace.

The challenge for Nvidia isn't just to beat estimates. Plenty of companies beat estimates and still see their stocks sell off. The real test is whether the company can convince investors that the AI boom still has plenty of room to run, that demand isn't about to fall off a cliff, and that the infrastructure spending that's driven the rally will continue well into 2025 and beyond.

With sentiment, valuations, and seasonality all pulling in different directions, Wednesday's report might need to be truly exceptional to keep the momentum going. Sometimes even being great isn't good enough when expectations have reached escape velocity.

Back to News

Nvidia's Earnings Could Swing $320 Billion — And Set The Tone For The Entire AI Trade

MarketDash Editorial Team
19 days ago
Wall Street is bracing for Nvidia's Q3 results Wednesday, an event that could either revive the AI rally or accelerate the tech selloff. With a potential $320 billion market cap swing on the line, the stakes have never been higher.

Here's a fun fact: when Nvidia Corp. (NVDA) reports earnings Wednesday after the bell, the potential market cap swing is larger than the entire value of nearly all the companies in the S&P 500. Options traders are pricing in a 7% move either way, which translates to about $320 billion in value at risk. That's more than what 475 out of 500 S&P companies are worth individually.

Welcome to the world where one company's quarterly results have become a referendum on the entire artificial intelligence revolution. No pressure, though.

The Bar Is Somewhere In The Stratosphere

Let's talk numbers. Wall Street is expecting earnings per share of $1.25, which would represent a 54% jump from last year. Revenue estimates sit at $54.88 billion, up 71% from the third quarter of 2024. These are the kind of growth rates that would make most companies throw a parade.

But for Nvidia, it might not be enough.

"NVDA near-term is facing the tough task of meeting high expectations and high skepticism around AI capex," said Bank of America's Vivek Arya, who maintains a Buy rating and recently bumped his price target from $235 to $275. Translation: everyone expects amazing things, but they're also wondering whether companies are actually going to keep spending ungodly amounts of money on AI infrastructure.

Arya pointed out that demand clarity and supply chain commentary will be critical this quarter. He emphasized that Nvidia remains unique in its full-stack AI hardware capability, particularly with upcoming product cycles including the Blackwell GB200 and Vera Rubin chipsets. The company isn't just selling chips — it's selling the entire AI kitchen sink.

Goldman Sachs analyst James Schneider is in the bullish camp too, anticipating what Wall Street calls a "beat-and-raise quarter." But he added an important caveat: the stock's reaction will depend heavily on "the level of upside to guidance." In other words, beating expectations by a little might not cut it. Investors want to be wowed.

Key items on the watchlist include updates on Nvidia's $500 billion datacenter revenue outlook, partnerships with OpenAI, the timeline for the Rubin chip ramp in 2026, and any China-related risks that could complicate the picture.

The Technical Picture Looks A Bit Shaky

Not everyone is quite so optimistic about the immediate setup. Jeff Jacobson from 22V Research took a more tactical approach, warning that the market might be mispricing the stock's near-term volatility.

"This implied move looks expensive," Jacobson said, noting that the average post-earnings move across Nvidia's last five reports has been just 3.9%. The 7% move being priced in seems like a lot by comparison.

From a technical standpoint, he's watching $180 as the critical support level. "That level has held since late September, even as other parts of the tech trade have stumbled," he explained. If Nvidia breaks below that zone, it could trigger additional selling, especially given how many trend-following strategies are still active in the market.

Jacobson also raised an interesting question about scale: "With a market cap of over $4.6 trillion, perhaps the days of 10%+ upside moves on earnings are now behind us." When you're already the world's most valuable company, physics starts working against you. Ten percent moves become increasingly difficult when you're talking about moving half a trillion dollars in market value in a single day.

This Isn't Just About One Stock Anymore

"Nvidia's results have become a macro event," said Kenneth Lamont, a principal at Morningstar. That's not hyperbole. The stock is held in nine out of 10 AI and Big Data ETFs globally, which means its earnings carry implications for sentiment and positioning across the entire technology landscape.

Lamont offered a nuanced take on the broader AI debate, cautioning that today's winners could easily become tomorrow's laggards. "Framing the debate as either an AI bubble set to burst or the dawn of a lasting transformation misses the point," he said. "History shows it can be both — the dot-com bust left failures and the seeds of today's tech giants."

That's a smart way to think about it. The internet didn't turn out to be a fad, but plenty of internet companies from 1999 are now footnotes in business school case studies.

Then There's The Seasonal Headwind

Here's something that might surprise you: Nvidia has historically struggled during the late November through December period. According to data from Seasonax, the stock has posted negative returns in seven out of the past 10 years during the stretch from November 19 through December 31, with an average loss of 2.2%.

Looking at the historical record, some years were brutal. In 2021, the stock dropped 10.82% during this period. In 2018, it fell 7.65%. Last year in 2024, it declined 8.65%. But there were also good years sprinkled in — 2019 saw a gain of 13.21%, and 2016 delivered a 9.88% return.

The point isn't that history will repeat itself exactly, but rather that investors should be aware that seasonal patterns don't favor the bulls right now, regardless of how strong the earnings might be.

Wall Street Is Still Raising Targets

Despite all the caution and skepticism, analyst sentiment remains decidedly bullish. The average price target across Wall Street now stands at $230.50, which implies about 27% upside from where the stock closed on November 18. And in just the past month, 12 major firms have raised their targets.

Loop Capital went the most aggressive, hiking its target from $250 all the way to $350 on November 3. Bank of America Securities moved from $235 to $275. Oppenheimer went from $225 to $265. Wells Fargo bumped its target from $220 to $265. The list goes on: Stifel, DA Davidson, Goldman Sachs, Rosenblatt, UBS, Susquehanna, Citigroup, and Morgan Stanley all raised their numbers within the past several weeks.

The highest target now sits at $350 from Loop Capital, while the lowest remains at $100 from Seaport Global. That's quite a range, which tells you something about how uncertain the outlook really is, despite all the bullish talk.

So What Happens Next?

Nvidia's earnings report will do more than determine the trajectory of one stock — it has the potential to reset the entire narrative for the AI sector. But traders face a complicated setup. On one hand, you have massive growth expectations and rising price targets. On the other, you have technical vulnerabilities, seasonal weakness, and growing questions about whether AI capital spending can sustain its current pace.

The challenge for Nvidia isn't just to beat estimates. Plenty of companies beat estimates and still see their stocks sell off. The real test is whether the company can convince investors that the AI boom still has plenty of room to run, that demand isn't about to fall off a cliff, and that the infrastructure spending that's driven the rally will continue well into 2025 and beyond.

With sentiment, valuations, and seasonality all pulling in different directions, Wednesday's report might need to be truly exceptional to keep the momentum going. Sometimes even being great isn't good enough when expectations have reached escape velocity.