Xinhua Finance Shanghai, August 28th (Ge Jiaming) - After the US stock market closed on Wednesday (August 28th), Nvidia is about to release its performance report for the second quarter of fiscal year 2025 (as of July 28th).
Driven by the AI boom, the US stock market continues to rise, with Nvidia contributing nearly a quarter of the S&P 500's gains so far this year. And Nvidia's financial report this time will become a key factor for the market to judge whether the AI investment boom can continue, or a turning point in market sentiment.
Scott Rubner, Managing Director of Goldman Sachs' trading division, stated in a report that based on option pricing, the release of Nvidia's financial report may cause a $298 billion fluctuation in its market value, with a stock price fluctuation of up to 9%.
Revenue and profit growth may slow down
According to data compiled by Visible Alpha, Nvidia's revenue for the second quarter is expected to grow to $28.668 billion, a year-on-year increase of 112% from $13.51 billion in the same period last year, but the growth rate is significantly slower than the previous quarter's 262%.
Analysts predict that Nvidia's net profit for the second quarter will increase to $14.95 billion, a year-on-year growth rate of 142%, which is significantly slower than the previous quarter's growth rate of 628%; Expected earnings per share of $0.60, representing a year-on-year increase of 141.49%. This means that the company may achieve record breaking revenue and profits for the fifth consecutive quarter.
Morgan Stanley expressed optimism about Nvidia's performance in its research report released on August 25th. The report suggests that Nvidia's financial report is likely to exceed expectations again this quarter, and the market's expectations for the company's revenue guidance for the next quarter will also increase again.
Morgan Stanley analysts believe that for Nvidia, the most crucial aspect of this financial report is to quell investors' concerns about delayed shipments of the Blackwell series due to redesign. It is expected that there will be no changes to the shipment schedule for Blackwell GPU and related server components in the fourth quarter of this year.
Raymond James analyst Srini Pajjuri believes that the delayed delivery of the Blackwell series may have some benefits for Nvidia's gross profit margin.
Goldman Sachs is also optimistic about Nvidia's financial report, expecting Nvidia's Q2 revenue and earnings per share to reach $29.769 billion and $0.68, respectively, which are 4.1% and 5.9% higher than market expectations.
According to FactSet data, Nvidia's revenue has exceeded expectations in every quarter of the past five years. From a profit perspective, Nvidia has only failed to meet market expectations in one quarter out of the past 20 quarters.
However, Michael Schulman, Chief Investment Officer of Running Point Capital, stated that Nvidia's profit growth rate will gradually slow down due to the law of large numbers in the future.
From a month on month perspective, Nvidia's growth has shown a slowing trend. Looking back at the past four financial reports, Nvidia's revenue growth rates were 88%, 34%, 22%, and 18% month on month, showing a gradual downward trend.
Analysts believe that the peak of growth stock prices is not when fundamentals peak, but when revenue growth and profit margins peak, because when revenue growth slows down, the market loses its imagination and investors are unwilling to offer high premiums.
Gonzalo Asis, Vice President of the Equity Derivatives Research Team at Bank of America, stated in a report that investors may have underestimated the risk of Nvidia's underperformance, and current trades to hedge this risk are more attractive.
The US stock market may experience severe fluctuations
Nvidia's stock price has risen by 166.3% so far this year, with a market value of $3.16 trillion, making it the second most valuable company in the S&P 500 index with a weight of 6.5%. Therefore, its performance may have a significant impact on the overall market.
Morgan Stanley predicts in its latest report that if Nvidia's revenue exceeds expectations, there may be a price increase of 3% -15% for AI related stocks. If not as expected, AI stocks will fall by 5% -10%, and optimism towards AI will also reverse.
According to data from the analysis company ORATS, option pricing shows that traders expect a fluctuation of around 9.8% after the company's financial report is released, which is higher than Nvidia's expected increase before the release of its financial report in the past three years and far higher than the average post performance fluctuation of 8.1% during the same period.
Steve Sosnick, a strategist at Interactive Brokers, analyzed the top 25 most active trades on the platform, with over 70% of trades related to Nvidia.
According to Susquehanna Financial's analysis of option data, traders are more concerned about missing out on Nvidia's significant increase. Traders believe that there is a 7% chance of Nvidia's increase exceeding 20% on Friday, while the possibility of a decrease exceeding 20% is only 4%.
However, according to BMO data, since the third quarter of this year, the "Big Seven" tech stocks have seen less growth than the other 493 constituent stocks in the S&P 500 index.
Analysts generally believe that the valuation of technology stocks has been at a high level due to their significantly faster profit growth compared to the S&P 500 index. However, since the beginning of this year, the profit gap between the "Big Seven" and other stocks has begun to narrow.
According to Bank of America's analysis, the profit growth rate of the "Big Seven" will continue to decline, from 53% in the first quarter to 19% at the end of the year. During the same period, the returns of the other 493 stocks will gradually increase from 0% in the first quarter to 13% at the end of the year. Due to the high base in 2024, the profit growth rate of large technology companies is facing challenges in 2025.