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Nvidia earnings: What investors should watch

Nvidia (NVDA) will be reporting third-quarter earnings after the bell on Tuesday, the last of the Magnificent Seven stocks to report. Many investors have high expectations for the company’s upcoming earnings report and are wondering how it will impact markets, as Nvidia shares are up over 200 percent year-to-date. The company’s outlook will also be in focus amid chip export restrictions to China. Yahoo Finance spoke to industry experts to break down what to watch from the company’s report.

Stifel Applied Technology Analyst Ruben Roy explained why he believes Nvidia will have at least “several quarters ahead… where we have quite robust results coming up.” “We haven’t seen any slowdown to… the momentum that Nvidia’s seeing on orders for their high-end chips… [and] large language model training networks and we expect that to continue into year end and into next year,” Roy says. Although supply constraints impacted some of Nvidia’s sales, “we expect those supply constraints to start to ease as we get into the end of the year.”

ARK Investments Founder, CEO, and Chief Investment Officer Cathie Wood breaks down why the flagship strategy does not own Nvidia. Although “Nvidia has been the enabler of these amazing breakthroughs in AI,” Wood says, people “are not thinking about who the prime beneficiaries are going to be.” “Every stock in our portfolio, practically, is there with AI as a reason” and there are four commonalities between the stocks, Wood explains, they each have “deep domain expertise… brought in AI expertise… good distribution… [and] proprietary data.”

The Citadel Professor Paul Meeks discusses what he’s worried about from Nvidia’s upcoming earnings. “I am worried that we have a repeat this quarter of what we had last quarter, where they also crushed the numbers and gave pretty good guidance… yet the stock took quite a pit,” Meeks explains.

Video highlights:

00:00:27 - Why Ruben Roy believes Nvidia will see robust future quarters

00:00:59 - Why Cathie Wood’s flagship strategy doesn’t own Nvidia

02:24 - Paul Meeks' worry for Nvidia stock

More Yahoo Finance Nvidia earnings coverage

Nvidia earnings: OpenAI drama, record high stock price set the table for key report

Video Transcript

[MUSIC PLAYING]

SEANA SMITH: It is a big week for Nvidia, as well, as the company gets set to report third quarter earnings after the bell tomorrow. The chipmaker's blockbuster earnings report back in may sent a ripple effect through the market, as investors bet big on the future of AI. Nvidia shares were up over 200%. So far this year, we're looking at gains of nearly 240% since the start of the year.

RUBEN ROY: We haven't seen any slowdown to, you know, sort of the momentum that Nvidia is seeing on orders for their high end chips called the H100, for large language model training networks, and-- and we expect that to continue into year end and into next year. There's been some supply constraints that have impacted, in our view, some of the sales that Nvidia could have had this year. And we expect those supply constraints to start to ease as we get into the end of the year. And so you put all that together, and we think we have several quarters ahead at a minimum, where we have quite robust results coming up.

CATHIE WOOD: The flagship strategy does not own it because of our research. Now, everyone knows Nvidia has been the enabler of these amazing breakthroughs in AI. But they're not thinking about who the prime beneficiaries are going to be. And we've taken a strong point of view on that. Every stock in our portfolio practically is there with AI as a reason. They're for-- for things they have in common.

One, they have deep domain expertise in their own business. They're really good at what they do, to begin with. Two, they have-- they have brought in AI expertise. They are taking this very seriously. Three, they have good distribution, preferably global but maybe US only or regionally. And then after that, most important is proprietary data.

Our companies have data that nobody else has. And they're going to be able to use the foundation models like OpenAI and Anthropic and Llama 2, which is Meta's. Those are free. They're open source. And they with their own AI expertise will build specialized models on top of those using their proprietary data. And they will get to better answers than any of their competitors and continue to leave their competitors in the dust.

PAUL MEEKS: I am worried that we have a repeat this quarter of what we had last quarter, where they also crushed the numbers and gave pretty good guidance. After the call, folks raised their numbers all over the street yet the stock took quite a hit. So I just worry about the reaction not the fundamentals that we'll see.

[MUSIC PLAYING]

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