Sa3)NVDIA stock post earnings

 Welcome back, investors, to Spark Your Finance, where we ignite your financial knowledge! Today, we're delving into the aftermath of NVIDIA's latest earnings report, a pivotal moment for tech enthusiasts and investors alike. NVIDIA's stock performance post-earnings is sending shockwaves through the market, and we're here to analyze every aspect of it.

In the wake of NVIDIA's earnings announcement, the stock market is buzzing with speculation and analysis. From revenue growth to guidance for the upcoming quarters, there's a lot to unpack. Join us as we dissect the key metrics, uncover any surprises, and provide valuable insights into what these numbers mean for NVIDIA's future trajectory.

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NVIDIA Corporation (NASDAQ: NVDA) was declining about 3% on Wednesday ahead of the company’s fourth-quarter earnings print, set to be released after the market closes.

When Nvidia printed a third-quarter earnings beat on Nov. 21, the stock closed down 2.46% the following day and subsequently entered a slight downtrend until bottoming out at the $450.10 mark on Dec. 4, where the stock began to surge into a steep uptrend.

For that quarter, Nvidia reported earnings per share of $4.02 on revenues of $18.12 billion, exceeding a consensus estimate of EPS of $3.36 on revenues of $16.12 billion.

For the fourth quarter, analysts, on average, estimate Nvidia will report earnings per share of $4.53 on revenues of $20.24 billion. Traders and investors will also be paying attention to how Nvidia guides its earnings for the next quarter and how it plans to continue harnessing opportunities in its AI applications.

Ahead of the print, Cantor Fitzgerald analyst CJ Muse reiterated an Overweight rating on Nvidia and maintained a price target of $775. Rosenblatt analyst Hans Mosesmann also weighed in on the stock, reiterating a Buy rating on Nvidia and a price target of $1,100.

From a technical analysis perspective, Nvidia looks neutral heading into the event, having negated its uptrend but working to print an inverted hammer candlestick on the daily chart.

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Bullish On Nvidia? Traders and Investors looking to play the possible upside in Nivida stock but with diversification may choose to take a position in the Spear Alpha ETF (NASDAQ: SPRX). SPRX is an actively managed fund offering investors the opportunity to achieve more than passive tracking of the broader market. Some of the fund's most popular holdings include Nvidia, weighted at 10.48%, Advanced Micro Devices, Inc. (NASDAQ: AMD) weighted at 9.04% and Snowflake, Inc. (NYSE: SNOW), weighted at 8.87%.

SPRX invests in companies capitalizing on emerging trends in industrial technology, aiming to uncover undervalued opportunities within various value chains aligned with themes such as enterprise digitalization, automation, AI, environmental focus, photonics, additive manufacturing, and space exploration. The ETF, traded on the Nasdaq exchange, targets long-term capital growth and is up about 64% over the last twelve months and about 4.2% year-to-date.

It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

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The Nvidia Chart: Nivida negated its uptrend on Tuesday by forming a lower low under the Feb. 13 higher low of $696.20. The sharp drop on Tuesday and on Wednesday may have been caused by the double top Nvidia formed on Feb. 12 and Feb. 16 at the all-time high of $746.11.

On Wednesday, Nvidia was attempting to hold support above the 21-day EMA, while printing an inverted hammer candlestick. An inverted hammer candlestick can indicate the local bottom has occurred and a bounce is on the horizon.

The lower prices over the last two trading days have helped to drop Nvidia’s relative strength index (RSI) down from overbought territory to about 55%. When a stock’s RSI is measuring near the 50% mark, it indicates that there’s room for the share price to move in either direction over the short term.

Bullish traders want to see Nvidia receive a bullish reaction to its earnings print and for the stock to rise up to form a new all-time high, which would suggest the recent downturn was a bear trap. Bearish traders want to see Nvidia suffer a bearish reaction to the news and for the stock to drop under the 21-day EMA, which could accelerate downside pressure.

Nvidia has resistance above at $696.20 and at $746.11 and support below at $634.93 and at $608.50.Analysts Have Been Raising Estimates

While the stock price has tumbled, analysts have been raising their estimates for Nvidia. According to analysts' estimates compiled by Visible Alpha, revenue for the fiscal fourth quarter is now seen at $20.80 billion, compared with $6.05 billion a year earlier, while net income is projected at $10.58 billion, up from $1.41 billion. A week ago, the consensus view called for revenue of $20.38 billion and net income of $10.40 billion.

Analysts at Wedbush said that their conversations with server manufacturers show a "lifting backlog on better sales momentum" for Nvidia. "The only question around NVDA's near-term performance and outlook, in our view, is to what magnitude results and guidance will exceed" estimates, according to a report last week.

Nvidia Earnings To Affect Broader Market Sentiment

Following its last two earnings releases, in August and November, even with tremendous beats on profit and revenue, the stock fell in the immediate aftermath of the report only to eventually turn higher.

"The company has delivered strong earnings before only to disappoint a voracious market that expects ever more as it trades at a hefty valuation," LPL Financial's chief global strategist, Quincy Krosby, said Wednesday in a market commentary.

With a market capitalization of nearly $1.7 trillion, Nvidia is the fourth most valuable company in the S&P 500 after Microsoft (MSFT), Apple (AAPL), and Amazon (AMZN), meaning results could have an outsized impact on the index after the report.

That dip didn’t last, it’s worth noting. And it’s less a commentary on Nvidia’s earnings and more about the extraordinarily high expectations investors have for the artificial intelligence market. As of 5:15 p.m. ET, Nvidia shares were up 8% in after-hours trading and had gained as much as 10% at one point.

The reaction to Nvidia’s earnings had a ripple effect. Shares of Super Micro Computing also soared nearly 8% in after-hours trading. Arm Holdings was up 5%. And AMD gained more than 3%.

The strong Nvidia beat—and the comments of the company about sustained demand for microprocessor chips—gave the market a collective sigh of relief. The trading desk at Goldman Sachs has called Nvidia the “most important stock on planet Earth.”

That, in some ways, makes Nvidia president Jensen Huang the new E.F. Hutton: When he speaks, people listen. The real turnaround in the after-market came after Huang said in an earnings release that, “Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries, and nations.” Also, as investors noted the data center segment of the business beat expectations and posted a 409% year-over-year increase, despite Colette Kress, the company’s CFO, saying, “data center sales declined significantly [emphasis ours] in the fourth quarter due to U.S. government licensing requirements.”

Thank you for joining us on Spark Your Finance as we explored the post-earnings landscape of NVIDIA stock. Remember, the world of finance is ever-changing, and staying informed is key to making wise investment decisions. If you found this analysis helpful and insightful, don't forget to subscribe to Spark Your Finance for more updates on NVIDIA and other market movers.

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