Nvidia (NASDAQ:) hasn't said anything yet, but the market has already been volatile, giving an idea of the potential for a positive or negative move when results are finally released.
Yesterday, NVIDIA suddenly fell nearly 6% and is down more than 4%, apparently as some investors who were long on NVIDIA tried to pocket their profits and move to the sidelines to avoid taking risks. and ended the transaction. If a move in the wrong direction occurs, there is the potential for a large move that can erode your profits.
Nvidia will announce this quarter's most anticipated earnings after the bell today. Nvidia is expected to report fourth-quarter revenue of approximately $20 billion and earnings per share of $4.60.
Those numbers are huge considering that a year ago, the company had revenue of about $6 billion and EPS of just 88 cents. We're talking about his sales growth of over 200%. This is a huge number, regardless of whether the company is meeting expectations or not.
But, of course, the price fluctuations were also large. Nvidia is up over 400% since the beginning of 2023. This is why any adjustments can be massive.
According to the option positioning, we could see a 10% move on the upside or downside. Mind you, this is perfectly acceptable for a tech giant. Meta (NASDAQ:) rose 20% after reporting its own earnings for the season.
Still, the shaking in the capital is expected to be severe. Nvidia's results could cause a $200 billion earthquake across the market and a tsunami of tens or even hundreds of billions of dollars.
Results are mixed, and, heaven forbid, poor results could send Nvidia's stock price crashing, but on the other hand, if earnings aren't strong enough, there's not enough positive momentum for even an improved performance. You may not be able to gather momentum. That's how strong my expectations are.
Zooming out, Nvidia's 4% drop yesterday sent an early warning to the market. It fell 0.6% and settled below 5,000 at the close, but it was still down nearly 0.80%.
With many predicting the AI bubble will burst at some point, it feels like Nvidia's earnings could be the defining moment of the AI rally. But it's worth noting that no matter what happens today, the AI revolution is happening.
There has been significant investment in this area, and the funding will continue. The question is not whether there is enough demand for AI businesses, but whether companies have enough capacity to meet the explosive demand.
Did someone say “hiking”?
In addition to Nvidia, the Federal Reserve is also scheduled to release its latest minutes amid confusion in expectations. This year began with expectations that the Fed would begin lowering interest rates as early as March.
Those expectations quickly diminished following very positive employment numbers, strong economic data and the latest rise in inflation.
And now, not only has the Fed's first expected rate cut been pushed back to June (about an 80% chance), but some are saying the Fed's next move could result in a rate cut for me too. I feel the wind direction changing. hiking!
That's clearly what currency traders are thinking right now. The euro is regaining strength and EUR/USD is back above the 1.08 level, right under the surprise eyes of euro bears. Euro bears had expected the weaker economic growth outlook in Europe to maintain at least the year-to-date bearish trend.
Whether this pair is worth extending profits beyond the 200-DMA depends on your appetite.
One more thing about the interest rate hike debate. Both the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) are leaving the door open to the possibility of further policy tightening.
At this stage it is just an idea and not a mature decision, but if the RBNZ decides to raise rates on February 28th, the devastation will be huge.
