Nvidia bulls stampede into earnings: Opening Bid top takeaway
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Nvidia bulls stampede into earnings: Opening Bid top takeaway
Investors holding their breath for a rate cut may soon get their wish. The Dow Jones Industrial Average rallied more than 700 points to reach a new intraday record. The Street is looking for big things from Nvidia’s earnings report. But there is one worry about Nvidia, brought up by Evercore ISI analyst Mark Lipacis, who says there is no precedent for the chip giant to have a higher weighting in the S&P 500.
Fed Chair Jerome Powell’s highly anticipated speech at Jackson Hole this morning has sent stocks flying. Bulls who were hoping Powell would finally come around to the view of cutting interest rates in September were fed a hint.
While Powell noted that inflation and tariffs remain concerns, “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” The Dow Jones Industrial Average (^DJI) rallied more than 700 points to reach a new intraday record.
Here’s what’s top of mind for the Opening Bid team.
Stock analysis: Nvidia
Nvidia (NVDA) bulls are stampeding over themselves heading into the chip darling’s Aug. 27 earnings report.
At least nine analysts have hiked their Nvidia price targets this week. The average Street price target on Nvidia now stands at $191, according to Yahoo Finance data, about 10% above current share price.
The Street is looking for big things from Nvidia’s earnings report. Most important is the general expectation that AI demand is accelerating.
Analysts even expect news around Nvidia’s China business to be bullish for the stock. CEO Jensen Huang fueled that narrative today during an overseas trip, teasing that the company is in talks with the US government on shipping a new, more advanced chip to China.
But there is one worry about Nvidia, brought up by Evercore ISI analyst Mark Lipacis. Investors are concerned that Nvidia, at an 8% weighting of the S&P 500, can’t capture a higher weighting because there is no precedent, Lipacis wrote.
He was quick to push back, however.
“Since Nvidia is offering a vertically integrated chip + software + hardware + networking ecosystem, we show that the PC+Networking ecosystem of Intel+Microsoft+Dell+Cisco captured 14% weighting at their peak, and we think that this is the precedent to benchmark Nvidia against,” Lipacis wrote.
One other thing that may not be a worry: Nvidia’s valuation.
Nvidia’s valuation doesn’t look over-stretched. · EvercoreISI
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