Bloomberg Wed, May 25, 2022
It’s only been six months since Nvidia Corp. was being hailed as Wall Street’s next US$1 trillion tech stock. The memory now seems distant.
Having soared to a record back in November, the chipmaker has pretty much given back all its gains of the last 12 months, rattled by this year’s rout in high-valuation stocks. For investors wondering where the stock is headed next, first-quarter earnings due after US markets close on Wednesday will provide a stern test.
Analysts expect the results to show robust growth with profit and revenue projected to climb more than 40% each in the three months ended March 31, according to data compiled by Bloomberg. Yet as the likes of Snap Inc. and Netflix Inc. have shown, the market has little tolerance for disappointment right now. And with Nvidia still trading at relatively high multiples, it can’t afford any slip ups.
“It’s hard to be negative about Nvidia’s long-term prospects, but the stock is still pretty damn expensive, and we don’t think the market has bottomed on growth stocks,” said Tom Plumb, manager of the Plumb Balanced Fund. “Given where sentiment is, there’s a high bar for what kind of results would be a positive catalyst, and a low bar for what would disappoint. An in-line report won’t be enough.”
Shares climbed 2.2% on Wednesday while the Philadelphia Stock Exchange Semiconductor Index rose 0.9%.
