NVDA slides alongside cybersecurity, tech stocks

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  • Nvidia releases Q4 earnings after the close on Wednesday, February 21.
  • Wall Street consensus has Nvidia earnings at $4.64 in adjusted EPS.
  • Revenue is projected to climb 240% YoY to just under $20.6 billion.
  • The weekly chart shows NVDA making an Evening Doji Star pattern.

Nvidia (NVDA) stock has shed another 2% to circle $680 on Wednesday as the entire market braces itself for the most anticipated earnings release of the season. The premier semiconductor designer in the world releases its fourth-quarter results after the close on Wednesday.

Nvidia briefly became the third most valuable publicly-traded company last week, surpassing the market caps of both Amazon (AMZN) and Google-parent Alphabet (GOOGL). This week the company has shed more than 5%, dropping back into fifth place, as its lofty valuation worries many market participants, who conceive that an earnings miss or guidance cut would have repercussions for the whole market. 

Additionally, Minutes from the previous Federal Reserve (Fed) meeting in January will be released during Wednesday’s session and are weighing on markets that don’t expect an interest rate cut in the near term.

Wednesday has tech stock reeling as Palo Alto Networks (PANW)SolarEdge Technologies (SEDG)Teladoc (TDOC) and Crowdstrike (CRWD) all sell off to the tune of double digits on earnings-related turmoil. The tech-heavy NASDAQ Composite is down about half a percentege point at the time of writing.

Nvidia stock earnings news

Wall Street is expecting Nvidia to post Q4 adjusted earnings per share (EPS) of $4.64. This would amount to an astounding 426% from a year ago and is the reason why Nvidia stock has gained 230% in just the last year. 

Revenue is projected to rise 240% YoY to just shy of $20.6 billion as enthusiasm for artificial intelligence (AI) related server chips grows exponentially. Nvidia is the company at the heart of the supposed “AI revolution,” and competitors like Advanced Micro Devices (AMD) and Intel (INTC) are simply picking up the scraps.

For the quarter at hand, Nvidia has received more than 30 upward revisions to both earnings and revenue and not one lower revision. Goldman Sachs surprised the market earlier this month, when it upgraded its NVDA stock price target from $620 to $800 per share as the investment bank’s analyst said demand for AI chips would not let up in 2024.

Nvidia’s stock price will likely gyrate based on CEO Jensen Huang’s guidance for the 2024 calendar year (fiscal 2025). The current consensus calls for $21.51 in adjusted EPS on revenue of $91.3 billion for the full year.

 

Semiconductor stocks FAQs

A semiconductor is a term for various types of computer chips. Officially called semiconductor devices, these computer chips rely on semiconductor materials like silicon and gallium arsenide to process the electrical current that produces the modern world of computing. They come in many shapes, sizes, enhancements and configurations such as diodes, transistors and integrated circuits to more complicated applications like DRAM memory, simple processors and even GPUs.

First, there are the pure chip designers, such as Nvidia, AMD, Broadcom and Qualcomm. These companies use sophisticated software to design and test chips. Second, there are the equipment manufacturers that provide the machines necessary to build computer chips. These include ASML and Lam Research. Then, there are foundries that manufacture the chips. These include Taiwan Semiconductor and GlobalFoundries. Last of all are the integrated device manufacturers who design their own chips and additionally manufacture themselves. These include Samsung and Intel.

It is the observation that the number of transistors in an integrated circuit doubles every two years. The “law” is named after Gordon Moore, who founded Fairchild Semiconductor and later Intel. The doubling is possible due to the shrinking size of process nodes or parts in the computer chip. In 1971 the advanced commercial manufacturing had reached 10 microns in width. In 1987 semiconductor technology had advanced to 800 nanometers in width. By 1999, this process had moved to 180 nanometers. By 2007, the size had dropped to 32 nanometers, and this fell all the way to 3 nanometers in 2022, which is close to the size of human DNA.

In 2022, the global semiconductor industry had revenues just under $600 billion. In total, the industry shipped 1.15 trillion semiconductor units in 2021. The leading nations involved in the semiconductor supply chain are Taiwan, the United States, China, the Netherlands, South Korea, Japan and Israel.

Nvidia stock forecast

The worry among traders in the lead up to earnings is that Nvidia stock is showing signs of a bearish Evening Doji Star pattern on the weekly chart. This is when a Doji candlestick is perched above the previous candle’s long rising candle and followed by a bearish candlestick that closes below the midpoint of the first candlestick in the pattern. 

Adding to the worries, the Doji candlestick from last week sits right on top of the long-term top trendline that has been creating a ceiling on NVDA stock since August 2020.

If Nvidia stock does miss on the earnings result, then expect NVDA to crater back toward the former resistance level of $500. The 21-week Simple Moving Average is also not far above that price level.

NVDA weekly stock chart

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