Nvidia Stock Drops 6% Ahead of Key Earnings Report

“Nvidia’s stock faced a substantial 6% decline on Tuesday, signaling its most significant single-day drop since December 27, 2022, as investors brace for the company’s upcoming earnings report. The stumble comes amidst a broader sell-off in technology stocks, with long-term Nvidia investors finding some reassurance in the stock’s 40% increase since November 22, 2023, the day after its last earnings release.

This recent downturn seems to stem from a mix of profit-taking ahead of Nvidia’s fourth-quarter earnings report and a surge in options trades predicting a significant fluctuation in the company’s stock price post-earnings. The stock’s recent surge has been attributed to a variety of factors, including a growing interest in AI and Nvidia’s solid execution, according to Bank of America analyst Vivek Arya.

In addition to Nvidia, other companies considered top AI players, such as Arm Holdings, Palantir, and Super Micro Computer, also experienced declines of 5% or more on Tuesday. Despite this, each of these companies has significantly outpaced the Nasdaq Composite index both year-to-date and over the past 12 months.

Tuesday’s sell-off led to Nvidia shedding nearly $110 billion in market capitalization, causing it to fall below Alphabet and Amazon in market value, relinquishing its position as the third most valuable company in the U.S.

Looking ahead, analysts are eagerly anticipating Nvidia’s earnings report, with Wedbush analysts led by Dan Ives noting, ‘When Nvidia holds its conference call this week, you will be able to hear a pin drop on trading floors across Wall Street.’ Analysts project Nvidia to report a 270% increase in profits and a 120% year-over-year sales growth for its fourth fiscal quarter, significantly outpacing other tech giants like Microsoft.

Nvidia’s impressive performance is part of a broader trend in the tech sector, where companies like Microsoft have also seen significant growth. Nvidia’s success is attributed to its leadership in semiconductor chip technology, which is powering the growth of generative AI. The company is expected to report full-year sales of $59 billion and net profits of $28 billion for its fiscal year ending last month, far exceeding estimates from a year ago.

While the recent stock decline is notable, many analysts remain bullish on Nvidia’s long-term prospects, citing its strong market position and the growing importance of AI in various industries.”