"Wall Street will get a sense of where the billions of dollars being spent on artificial intelligence are going when Nvidia Corp. reports its earnings after the bell on Wednesday. How the sinking stock market will react is another question. This is a so goes Nvidia, so goes the market' kind of report, said Scott Martin, chief investment officer at Kingsview Wealth Management, which owns shares of Nvidia and several of its Big Tech peers."
"Analysts expect the chip behemoth to show more than 50% growth in both net income and revenue in its fiscal third quarter. The reason is fairly straightforward. Microsoft Corp., Amazon.com Inc., Alphabet Inc. and Meta Platforms Inc. which taken together represent more than 40% of Nvidia's sales are projected to increase their combined AI spending by 34% over the next 12 months to $440 billion, according to data compiled by Bloomberg."
"The risk is that these numbers could become unreliable if the big AI spenders, in particular closely held OpenAI, have to pull back on their commitments. These players in the AI space have gone out of their way to continually raise the expectations bar, and now they have to not only deliver on the numbers, but continue to feed the market's rising expectations, said Michael O'Rourke, chief market strategist at Jonestrading. It is a dangerous game for public companies to play."
Nvidia is expected to report fiscal third-quarter results showing over 50% growth in both net income and revenue. Major customers Microsoft, Amazon, Alphabet and Meta represent over 40% of Nvidia's sales and are projected to raise combined AI spending by 34% to $440 billion over the next 12 months. The reliability of those projections depends on continued commitments from big AI spenders, including OpenAI. Strong Nvidia results typically lift the stock market due to Nvidia's large S&P 500 weight and central role in the AI trade. Investors face risk if AI spending slows or expectations are unmet.
Read at www.mercurynews.com
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