JPMorgan says Nvidia’s profit blowout could actually be bad news for the stock

Lucas Jackson/Reuters

  • Investors’ expectations for Nvidia’s upcoming earnings report are very high.

  • JPMorgan said Nvidia’s stock price could react negatively to the blowout earnings report.

  • JPMorgan said the “bigger the tempo,” the more the market “perceives that supply is improving.”

All eyes will be on Nvidia After the close today, the company will release its fourth-quarter earnings report along with investor expectations It’s sky high.

Even if Nvidia beats investor expectations when it reports results and guidance, the stock could see a negative reaction, a report said on Wednesday JPMorgan Chase the trading desk said.

JPMorgan said of data center revenue: “If Jensen’s GPU behemoth can report massive amounts of data, and by ‘great’ I mean data center spindles exceeded $20 billion in the fourth quarter, data center revenue in the first quarter will accelerate growth,” the stock may be good, but it also raises the question of whether supply is improving. “

Nvidia’s H100 GPU chips have been in tight supply for months due to surging demand.The mismatch between supply and demand over the summer was severe Elon Musk says Tesla can’t buy them fast enough.

“We use a lot of Nvidia hardware,” Musk Tesla said on its second-quarter earnings call“Realistically, we’ll take it as fast as they deliver it to us. Frankly, if they could provide us with enough GPUs, we probably wouldn’t need Dojo. But they can’t. They have a lot of customers.”

But if supply constraints start to ease, it could be a bad sign for Nvidia, as it could lead to a supply glut, which is not uncommon for the semiconductor industry.

“The larger the guidance, the more the market will believe that supply is improving and that an inventory correction may occur in the second half of 2024,” JPMorgan said.

Nvidia Stock Faces Downside Risks substantial growth over the past year, The stock appears to be a lose-lose situation in the short term, with the bank saying that if Nvidia’s stock price misses analyst expectations, its 11% implied upside is “definitely more than scary.”

“So, bad is bad, good is good/bad, but too good may not be good,” JPMorgan said.

Here’s what other Wall Street analysts are saying Looking forward to Nvidia’s upcoming earnings report.

Read the original article business insider

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