Nvidia's Stock May Fall Despite Expected Earnings Beat
Nvidia is set to release its fiscal second-quarter operating results after the closing bell on August 26, and history suggests it will disappoint Wall Street. Despite consistently crushing analysts' estimates in recent years, Nvidia's shares have endured at least a two-day losing streak following each of its previous four earnings releases.
The company has been buoyed by a persistent GPU supply shortage, which has allowed it to charge a premium for its superior graphics processing units (GPUs). However, investors' expectations are often too lofty, resulting in multiday losing streaks after Nvidia reports its earnings. On average, Nvidia's stock has dropped 2.79% the day after it reports its operating results and 5.31% over the two days following its quarterly earnings.
The bulk of earnings season is now in the rearview mirror, but this report may have a significant impact on Nvidia's valuation, which could be reduced by around $290 billion based on its August 13 close. This persistent sell-off after earnings likely reflects the otherworldly expectations that investors have placed on the face of the AI revolution.