Nvidia's big day

Happy Nvidia earnings day to those who celebrate—which at this point is pretty much the entire stock market.

The tech giant, which specializes in making chips that power AI software, is up 209% over the past year, and now comprises 5% of the S&P 500’s total market cap.

Nvidia proved itself to be the company to watch when it smashed earnings expectations a year ago, and this time around investors have sky-high expectations of CEO Jensen Huang when first quarter earnings are announced this evening.

The company is projected to keep its winning streak alive due to its rapid innovation in the processing power of its chips and continued strong demand from companies like Microsoft and Meta for its cloud data centers.

• Earnings per share projections call for $5.60 this quarter, well above the $5.16 it reported last quarter.
• The company is expected to announce $24.69 billion in revenue, according to Wall Street estimates—a 243% gain year-over-year.
• Shares have risen 97% year to date and hit a new all-time high on Tuesday, though analysts expect it to go higher—the average 12-month price target pegs Nvidia at $1,057.76, over 11% higher than where shares stand today

So, what should investors be watching during the company’s earnings call? According to Morningstar equity analyst Brian Colello, the company’s data center supply chain constraints will be one question on investors' minds, in addition to how the firm will compete with in-house chip development at major tech companies.

“The sky is the limit for the company’s profitability if it can maintain this lead over the next decade,” Colello wrote. “However, any semblance of the successful development of alternatives could meaningfully limit its upside.”

Shares of Nvidia dropped slightly on Wednesday ahead of its announcement. Traders are already preparing for earnings to trigger a huge stock move in either direction.

The results have implications for the broader market too, even if you’re not directly invested in the company. Its previous earnings results in February triggered the S&P 500 to surge 2.11%—its strongest daily performance in over a year, according to Deutsche Bank.—LB