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November 11, 2024November 11, 2024

What Could Drive Nvidia Down?

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Technology

24/7 Wall St. Insights

What drives stocks down? Usually, earnings or weak forecasts. Nvidia Corp. (NASDAQ: NVDA) could report either. The expectations for its quarterly numbers are extraordinarily high, and they should be. Nvidia reports on November 20.

In the most recently announced quarter, revenue rose 122% to $30 billion, and earnings rose 168% to $0.67 per share. Based on its forecast for the next quarter, Nvidia expected revenue to be $32.5 billion.

What do analysts think? According to Yahoo! Finance, revenue of $33 billion in the quarter about to be announced, followed in the next quarter by $37 billion. The average estimate for per-share earnings in the quarter is $0.74, and then by $0.81 in the quarter after that. However, the high end of estimates is about 10% above the consensus of 64 analysts.

How do these analysts see Nvidia’s stock price? The stock currently trades at $147. The high target is $203, and the low target is $75. At the low target, the stock would reset 50% down from its current value. The 50% reset is not crazy. The stock traded for $50 at the start of 2024.

Nvidia is the proxy for the AI sector. One concern about this sector is that it is overvalued because financial returns against AI investment may be one or even two years away. If Nvidia misses expectations, the anxiety about the entire industry will jump.

Why AI Is Set to Explode in 2025

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