Tomorrow Nvidia’s quarterly reports: the SP500 index trembles

Wednesday, November 20, the AI giant Nvidia will release the financial results for the third quarter, with direct consequences on the prices of the SP500 index.

The analysts expect earnings growth to 33 billion in earnings with a gross margin of 73-74%, enough to fuel a new bull run for the stock.

Attention, however, because unpleasant surprises could have a negative impact on both stock indices and Bitcoin.
All the details below.

Financial results of Nvidia: the most anticipated event of the week among SP500 stocks

Nvidia, a leading company in the AI market, is about to release the much-anticipated financial data for Q3 2024, offering an opportunity for volatility for the SP500.

According to Bank of America, this is the most anticipated event of the week by the US markets, given the disruptive impact expected on prices.

The banking multinational even believes that the news will move more than the data on non-farm payrolls (labor market) or the data on inflation.

The performance of the chipmaker could trigger unprecedented market swings across all financial sectors, including the crypto segments.

There are concerns related to the high energy consumption of the next-generation Blackwell platform developed by Nvidia.

In any case, Bank of America remains bull on the stock listed on the Nasdaq, and expects results better than expectations.

We remind you that Nvidia has beaten earnings targets in ten of the past twelve quarters, earning the respect of the entire SP500 index.

This time around, analysts’ forecasts are set at 33.09 billion dollars in profit with an EPS of 0.76 dollars per share.

If the results were to be better than expected, we could anticipate a strong jump in the price of the NVDA stock, which is now aiming for the target of 150 dollars.

On the contrary, an unpleasant surprise for the sales of the Santa Clara company would lead to a sharp stop below the EMA 50 at 130 dollars.

What do analysts think of Nvidia?

Everyone is buzzing about Nvidia’s next moves, as its “earnings” will impact the SP500 and all speculative markets.

Overall, analysts believe that this time too the AI giant will beat earnings, continuing the average streak of positive surprises at 15%.

Rosenblatt Securities maintains a Buy rating on the stock with a price target of 200 dollars by the end of the year, expecting a positive earnings report.

Morgan Stanley reiterated an Overweight rating on NVIDIA, highlighting the potential of the Blackwell product line. Evercore ISI maintained a long asset, citing accelerated orders at cloud service providers.

HSBC expects that NVIDIA’s third-quarter sales will reach 35.3 billion dollars, surpassing both the management’s guidance and consensus estimates.

In the wake of the positive notes from competitors, Jefferies has also increased its price target on the stock. 

In general, the forecast of the large financial funds and banking corporates is that Blackwell will have a good debut and will be accompanied by a robust AI demand.

How Nvidia’s quarterly reports will influence the SP500 index

Nowadays Nvidia drives 20% of the returns of the S&P 500, constituting in perspective 25% of the earnings growth of the third quarter.

A surprise (positive or negative) on the semiconductor company’s reports will inevitably lead to volatility of the stock index.

Consider that at the end of Q1 the excellent results led to a 24.4% rise in the stock in just one day, shaking the entire market.

According to the calculations of the operators, a positive financial report of Nvidia could move the SP500 by 1.05% on the day of demand.

We are talking about an increase in market capitalization of 458 billion dollars, more than the current market cap of Ethereum.

Despite the optimism that is in the air, there is also the danger of uncertainty to consider.

The trading volumes have increased as investors position themselves for potential volatility, hedging against possible black swans.

According to Bank of America: 

“The options are assigning a broader risk on the NVDA earnings market compared to the NFP and CPI days of next month and up to the December FOMC”

Many analysts, despite knowing the explosive potential of Nvidia, are seeking protection while institutional investors have doubled their coverage.

Trading desks also report increased client requests for protection strategies.

Despite the stock being traded near its 52-week high, there are risks of fragility around earnings issues.

Correlation Bitcoin and SP500: will the news also affect crypto prices?

As mentioned, the news about Nvidia could have effects of volatility not only on the SP500, but also on Bitcoin and crypto.

Currently, according to the  “BTC Pearson Correlation” chart provided by The Block, Bitcoin and stocks  are at high levels of 30-day correlation.

In particular, Nasdaq and SP500 report values of 0.78 and 0.72 respectively (on a level ranging from -1 to +1). 

This means that at this moment if the US benchmarks were to register a strong decline, even the cryptocurrency par excellence would be affected

Comparing Bitcoin and SP500 individually, we notice similar movements on both sides since the beginning of 2024.

Setting aside rare individual events of decorrelation like the one recorded in July (stocks up, crypto down), generally the two asset classes move in tandem.

In August, for example, both marked a bear plunge in the wake of macroeconomic fears.

In the last few days, however, the post-election positivity has led to a bull effect on both Bitcoin and stocks.

Attention because in this situation the distance from the EMA 50 for the crypto could act as a magnet for a more significant dump, in case of negative signs from Nvidia.