Nvidia Set to Post Stellar Growth, Showing AI Isn’t Just Hype: US Earnings Week Ahead

Rachel Phua, Ignacio Gonzalez, Redd Brown and Gabriel Sanchez
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(Bloomberg) -- A key focus for investors will be how well Nvidia Corp. can keep capturing the growth for artificial intelligence.

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The tech darling — its market value reached $1.8 trillion this week — will have to show investors whether its performance is consistent with their “high expectations,” said Jennifer Foster, co-chief investment officer at Chilton Investment Company.

Companies’ willingness to invest in cybersecurity and software will also be a concern among Palo Alto Networks Inc., Synopsys Inc., and Intuit Inc. shareholders.

Cost-cutting measures will remain a dominant theme for US companies this week, following a slew of recent job cuts. While the US economy has shown resilience so far, some executives have urged caution about the business environment this year.

“The economy is strong but slowing,” said Grace Lee, a senior portfolio manager at Columbia Threadneedle.

Monday: No notable earnings.

Tuesday: Walmart’s (WMT US) adjusted EPS is slated to fall 3.5%, the first decline in more than a year, on higher labor and product costs, BI said. The company is boosting compensation to retain store managers, while shoppers shift to lower-margin consumable and health items. Walmart may discuss a WSJ report that it’s in talks to buy consumer-electronics maker Vizio Holding Corp. for more than $2 billion.

  • Diamondback’s (FANG US) $26 billion takeover of Endeavor and how it will affect future earnings, as well as bolster dividends and buybacks, will be the focus when the shale driller reports. The deal may dilute Diamondback’s 2025 EPS by 2%, BMO said.

  • Palo Alto Networks (PANW US) could modestly beat expectations and reaffirm its outlook after its clients issued strong results, Stifel said. Annualized recurring revenue probably grew 47% in the fiscal second quarter, compared with a 63% jump a year earlier.

  • Home Depot’s (HD US) same-store sales probably fell 3.6%, though declines shouldn’t be as steep in subsequent quarters. The home improvement store is trying to expand market share among professional customers — a key driver of higher comparable store sales — by targeting complex projects, BI said.

Wednesday: Nvidia’s (NVDA US) revenue is expected to more than triple for a second straight quarter, buoyed by soaring demand in its data center business, which accounts for 80% of the chipmaker’s sales. AI demand remains strong, especially with Meta and Tesla continuing to load up on graphics processing units, Susquehanna said.

  • Analog Devices’ (ADI US) first-quarter sales are projected to fall 23%, a third consecutive drop, amid weak demand in all the sectors it makes chips for. Peer Texas Instruments’ soft outlook and revenue contraction may be an indicator for Analog Devices.

  • Synopsys (SNPS US) — closing in on a $34 billion deal to buy Ansys — should post healthy sales growth, BI said, as its customers ramp up R&D and AI spending.

  • Rivian’s (RIVN US) vehicle deliveries fell short of analysts expectations, highlighting the automaker’s challenges amid supply-chain issues and lower electric vehicle demand. Lucid’s (LCID US) quarterly deliveries beat estimates. That meant it reached an annual target of 8,000 to 8,500 unit, though that was cut twice during 2023 from an original 14,000 forecast as it struggled to bounce back from supply issues and inconsistent output at the Arizona plant.

  • Trip.com (TCOM US) probably tripled its adjusted earnings per share, jumping to 2.34 yuan (33 US cents), as demand for travel in China exceeds pre-pandemic levels, BI said. A doubling in revenue will have helped offset higher sales and marketing expenses.

  • Etsy’s (ETSY US) gross merchandise sales are set to fall 1.5% as holiday shopping only partly offset weak consumer spending, BI said. Temu’s push into US markets might increase Etsy’s customer-acquisition costs, Jefferies analyst said.

Thursday: Keurig Dr Pepper’s (KDP US) adjusted EPS is seen rising 8.2%, as US sales of its refreshment beverages grows on higher prices and volume, though sales of US coffee probably fell. Moderating input and operating costs will improve margins, BI said.

  • Block’s (SQ US) Bitcoin revenue probably grew 33% last quarter, after shrinking a year earlier. Still, its initial 2024 gross profit outlook will probably miss expectations if it underperformed, Jefferies said.

  • Weaker demand for food delivery and mobility will take Grab (GRAB US) results lower than previously expected, Barclays said. Watch for comments on revived merger talks with GoTo Group.

  • Moderna (MRNA US) reported preliminary Covid-19 vaccine revenue of $6.1 billion for 2023, ahead of its outlook. Overall 2024 sales, including contribution from its RSV vaccine, will shrink to around $4 billion this year before growing in 2025, TD Cowen said.

  • Carvana’s (CVNA US) used vehicle revenue entered its sixth consecutive quarter of contraction as profitability and sustainability of virtual pre-owned vehicle sales remain a concern, BI said.

  • Intuit (INTU US) may miss on consumer group sales as $60 million to $65 million of revenue shifts to the fiscal third quarter following a delayed start in the US Internal Revenue Service’s tax filing season, Mizuho said.

  • Booking Holdings’ (BKNG US) revenue is projected to rise 17%. The company benefited from demand in Europe and the Asia-Pacific region where hotel spending remained resilient, Jefferies analysts said.

Friday: Warner Bros Discovery’s (WBD US) adjusted Ebitda probably rose 7.7%, consensus shows. Its licensing-first strategy — streaming shows like Young Sheldon on Netflix — boosted profitability, BI said. The company might detail its plans to launch a sports streaming service with Fox and Disney, which comes as its TV ad revenue is expected to continue falling.

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