Investors are anxiously awaiting Nvidia’s fourth-quarter earnings report, with sky-high expectations leading to concerns that a strong report could negatively impact the stock. JPMorgan’s trading desk warned that a blowout earnings report could lead the market to believe that supply constraints are easing, potentially causing a negative reaction for Nvidia’s stock. The high demand for Nvidia’s H100 GPU chips has far exceeded its supply, leading to a considerable supply-demand mismatch during the past year.
Elon Musk previously stated that Tesla was unable to purchase the chips fast enough due to the high demand for Nvidia hardware. However, if the supply constraints are starting to ease, there could be potential issues with an inventory correction in the semiconductor industry. Following a substantial surge in Nvidia’s stock, risks appear to be skewed to the downside, with JPMorgan suggesting that an implied move of 11% is more than just “scary” if the company happens to miss analyst expectations.
In summary, all eyes are on Nvidia’s upcoming earnings report, with concerns regarding potential negative stock reactions even if the company’s results exceed investor expectations. Sky-high demand for Nvidia’s products and the potential easing of supply constraints have created uncertainty regarding the company’s stock performance, leaving it in a lose-lose situation in the short term.