AI Bubble Watch: Nvidia Earnings On Deck

AI Bubble Watch: Nvidia Earnings On Deck

Throughout July, panicked sellers exited or lowered their exposure to artificial intelligence suppliers. In the absence of any news, Nvidia (NVDA) led the decline.

Sellers capitulated on August 5, 2024. That day, Japan’s Black Monday moment marked the peak fear for AI stocks. NVDA traded as low as around $90.00 before bouncing back to $100.00.

NVDA stock closed at $124.58. Buyers bet that rumors of a delay in the next-generation AI server, Blackwell, is not a headwind for the chip leader.

On August 28, 2024, Nvidia will post quarterly results. At worst, the firm will beat expectations, thanks to strong sales of the H100 and H200 servers. The company may re-frame the narrative in the delays in the Blackwell AI server. It might warn shareholders that it will sell Blackwell in limited volumes.

Nvidia will need to explain why supply levels for the next-generation AI server are limited. It might want to sell more of the current-generation servers first. Still, markets might speculate that Nvidia has a yield issue.

The market’s sentiment on Nvidia stock will influence the share price of Taiwan Semiconductor (TSM), Broadcom (AVGO), AMD, Qualcomm (QCOM), and Arm Holdings (ARM).

Bargain hunters might buy Intel (INTC) instead. They are betting that Intel’s job cut will boost its operating margins.