Nvidia Earnings Could Unlock Nasdaq's Potential

Markets are looking for tech leader Nvidia's earnings to see if the AI boom still has momentum or if the trade war and other factors mean that the Nasdaq has peaked.

Key Factors for the Market

• Nvidia to report earnings on Wednesday after the market closes, with the consensus for EPS of $1.01 and revenue of $46 billion.
• The large chip manufacturer could be a bellwether for the tech sector as a whole, which has been treading water over the summer.
• Markets are expected to focus on Nvidia's guidance for insight into AI demand, as well as commentary around regulatory and trade impacts on the company's future sales.

High Expectations for Nvidia and the Market

The leading AI chip manufacturerweek when it reports earnings after the close on Wednesday. Last Friday, US equities ended on a positive note after Fed Chair Jerome Powell spoke in a more dovish manner, supporting the summer rally. Now traders will look to Nvidia to see if it can lead indices back to record highs.

Nvidia's earnings come at a, which has stalled over the summer, with the IT sector being the worst performer on the S&P 500. Even Nvidia has been under pressure. After surging 33% on the day of its Q1 earnings report, the stock has struggled to gain headway in August. Typically, high-valuation stocks like those riding the AI-backed tech boom are more sensitive to interest rate moves, and the persistently higher interest rates amid higher inflation could have hurt gains. If Nvidia manages to beat expectations, it could add to optimism in the wake of increased hopes for a rate cut in September and support the market.

Nvidia Earnings Face a High Bar

Analysts have been hiking their forecasts for Nvidia ahead of its earnings, usually a sign that the company will have strong results. But this also sets a high bar for the firm to beat. Nvidia has a history of surpassing expectations, with eight consecutive beats, allowing its stock price to jump after each time. Now,, up from $0.68 a year ago. Sales are projected to rise 53% over the last year to reach $46 billion. In its last quarter earnings,.

Markets will likely be looking closely at the company's guidance and commentary about demand dynamics in the AI space. Last quarter, the company had to write off $8.0 billion from its H2O sales, as trade tensions meant the company couldn't export them. After reaching a deal to sell the chips to China, reportedly, the as Chinese officials urge domestic producers not to buy them. Reports also suggest the company is developing a different chip for sales in its second-largest market. The earnings report would be a good opportunity for the company to clarify the status of H2O production as well as provide an update on its outlook on sales in China.

The Nasdaq Fading Relief Rally

After surging higher on Friday in the wake of Powell's comments at Jackson Hole, the Nasdaq is pulling back. The index bounced off the 23K, with a break higher potentially breaking the August high at 24K, as the RSI remains below the 70 overbought region, and a broadening wedge may be under development. On the flip side, a continuation of the downturn could extend losses towards the recent swing of 23K, followed by the August low of 22670, which would imply a break of the lower trendline and further potential for losses.

Source: SpreadEx | US Tech 100