Earnings report expected to soar! Can NVIDIA once again shoulder the "hope of the whole village"?

Data show that in the past 20 fiscal quarters, Nvidia has exceeded expectations for 19 consecutive fiscal quarters. Nvidia will announce last quarter's financial report tomorrow. If it continues to exceed expectations, it is expected to bring a double carnival between investors and the US stock market. Nvidia had previously bet on the success of artificial intelligence, because after the release of OpenAI ChatGPT, AI-themed transactions became very popular. Nvidia shares have more than tripled so far this year, contributing to an 18% gain in the S & P 500 index. At present, both technology giants and start-up technology companies are spending a lot of money on AI technology research and development. Since Nvidia's semiconductor chip specialty is AI research and development, this is of great help to the company. Huang Renxun, chief executive of Nvidia, said earlier that the progress of AI technology is giving birth to a new era of computing, and the company's market value has also soared to $1 trillion. The expectation that AI technology can help a large number of companies increase revenue and save costs has prompted investors to bet heavily on tech giants this year. Investors have particularly high expectations for Nvidia. Wall Street analysts predict that Nvidia's revenue will reach $16.2 billion in the last quarter and its profit will be $7.2 billion. In contrast, Nvidia's revenue and profit in the same period last year were only $5.9 billion and $0.88 billion, respectively. According to FactSet data, Nvidia has exceeded analysts' expectations in 19 of the past 20 fiscal quarters, so the company's outlook also has a huge impact on stock market trends. Wall Street now expects Nvidia's quarterly revenue to reach $22 billion by the fall of 2025. Analysts said investors expect Nvidia's high growth rate to continue for many years, so they hope to see more definite signs to prove this. Although the high policy uncertainty in the semiconductor industry has led to the recent flat performance of the company's stock price, the latest economic data have made investors increasingly convinced that the Fed's interest rate hike to combat inflation will not cause a recession and the US economy can achieve a soft landing. Prior to this, U.S. stocks have risen for 10 consecutive trading days, the longest consecutive rise since 2016, and have returned to near record highs. Among them, investors bought shares of seven technology giants commonly known as the "Seven Sisters" (Magnificent Seven), including Apple, Microsoft, Google, Amazon, Nvidia, Tesla and Facebook parent company Meta. There are also investors betting through options. The most popular options include call options with a strike price of US $500 or US $505. In contrast, Nvidia's stock price continued to rise by 1.04 to US $498.10 in intraday trading on Monday. Analysts said Nvidia shares may continue to surge. In May of this year, after Nvidia announced quarterly results and performance guidance that exceeded expectations, the stock soared 24% that month, and since then it has also started a surge in the U.S. stock market around the AI theme. For the third quarter, Nvidia and Amazon are expected to be the biggest contributors to the S & P 500 index's profit growth. Excluding the two companies, the data show that S & P 500's profit growth would be only 1.5 per cent, rather than the current 4.1 per cent. At the same time, the vast majority of analysts also continue to be bullish on Nvidia. Of the 52 analysts who studied Nvidia, 49 rated the stock as a buy and the other three rated it as a hold. Analysts have an average price target of $655.60, which is about 33% higher than Nvidia's current share price. However, the market's high expectations for Nvidia also worried some investors. Analysts said that in the long run, this means that Nvidia's fault tolerance rate has been drastically reduced.