Nvidia's Earnings Report Could Shake the Stock Market: Here's What to Watch For

US stocks slipped on Wednesday as investors bided their time ahead of chipmaker Nvidia's (NVDA) earnings report, seen as crucial to keeping confidence in the broader market aloft.

The Dow Jones Industrial Average (^DJI), which closed at an all-time high on Tuesday, was down almost 0.3%. The benchmark S&P 500 (^GSPC) fell more than 0.6%, while the tech-heavy Nasdaq Composite (^IXIC) was down more than 1.2%.

Stocks are caught in cautious trade ahead of Nvidia's second quarter results after the bell on Wednesday. The $3.2 trillion AI juggernaut's report will serve as a litmus test for AI spending and the tech sector, and could end up moving the market as a whole. Nvidia shares were down about 3.5% on Wednesday morning.

Traders are expecting a swing of almost 10% in the chipmaker's shares in either direction, depending on whether hopes for another blowout quarter are met. Wall Street forecasts Nvidia earnings grew by roughly 109% and revenue by 99%, year-on-year. Updates on any potential delays for Nvidia's new Blackwell chip will be in particular focus.

Nvidia's stock is up about 160% this year so far. Shares were little changed in Wednesday's premarket, after a wobbly start to the week.

Key Takeaways

AI Spending and the Blackwell Chip

Investors will be closely watching for any signs of a slowdown in AI spending, as well as updates on the production schedule for Nvidia's new Blackwell chip. Analysts are also eager to hear Nvidia's guidance for the rest of the year, which will provide insights into the company's future prospects.

Software Companies and the Windows Outage

In earnings, eyes are on Salesforce (CRM) results to shed light on whether software companies are starting to see a return on their AI investments. Meanwhile. CrowdStrike's (CRWD) report should give insight to the cost of the fallout from the global Windows outage in July.

Nvidia's Impact on the Market

Nvidia's earnings report is expected to be a major market mover. The company is a bellwether for the tech sector and its AI-related investments, and its results could have a significant impact on the broader market.

Nvidia's stock is up 160% this year, and investors are eagerly awaiting to see if the company can continue its impressive growth trajectory. The chipmaker is the second-largest stock in the S&P 500, and its performance could have a significant impact on the index's performance in the coming months.

Other Stocks to Watch

In addition to Nvidia, there are several other stocks that investors will be watching closely this week.

Kohl's (KSS)

Kohl’s (KSS) shares are moving higher in early trading, jumping as much as 7%, after the company beat Wall Street’s earnings expectations by 15 cents and raised its profit outlook.

In Q2, the retailer doubled down on inventory management and expenses, leading to a 9% year-over-year decline in inventory. It plans to stay “committed to increasing inventory turns and managing inventory down mid-single digits,” CEO Tom Kingsbury told investors on a call.

All this in an effort to be “competitive during a very promotional holiday season,” CFO Jill Timm said.

Kohl’s expects to end 2024 with a operating margin between 3.4% to 3.8%, alongside adjusted earnings per share in the range of $1.75 to $2.25.

The company did lower its full year sales growth guidance as a “difficult consumer environment” persists and Kohl's customers feel “the burden” of a higher cost of living, causing them to put less in their basket in Q2.

It now expects same-store sales to fall between 3% to 5% for fiscal year 2024, more than the previously expected year-over-year decline of 1% to 3%.

Sephora at Kohl’s continues to be a bright spot for the company. Total sales for the business jumped nearly 45% in Q2 year-over-year, with sales growth in the low-teens.

In 2024, the company added 140 total locations, surpassing 1,000 Sephora shops inside Kohl's.

“We've seen a nice crossover in terms of customers that are shopping at Sephora,” Kingsbury said, adding that “around 35% of the Sephora baskets have another product from Kohl's in their basket.” As the beauty store attracts younger shoppers, it plans to move the juniors section to the front of the store.

Berkshire Hathaway (BRK-A, BRK-B)

Shares of Warren Buffett's Berkshire Hathaway (BRK-A, BRK-B) added about 1% early Wednesday morning to pass a $1 trillion market cap for the first time. Berkshire becomes the first company in the US that isn't a pure-play tech company to cross a $1 trillion market cap.

The stock is up more than 28% year to-date.

Super Micro Computer (SMCI)

Super Micro Computer (SMCI) stock plunged as much as 22% early Wednesday after the company said it would delay the filing of its annual report for its fiscal year that ended June 30.

The announcement comes a day after short seller Hindenburg Research claimed, among other things, “accounting manipulation” at the AI high flyer.

“SMCI is unable to file its Annual Report within the prescribed time period without unreasonable effort or expense,” the company said in a statement. “Additional time is needed for SMCI’s management to complete its assessment of the design and operating effectiveness of its internal controls over financial reporting as of June 30, 2024.”

The stock fell about 2% on Tuesday after Hindenburg said its three-month investigation “found glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.” The firm also disclosed it had taken a short position in Super Micro.

The Market's Wait-and-See Approach

US stocks stalled on Wednesday as investors bided their time ahead of chipmaker Nvidia's (NVDA) earnings report, seen as crucial to keeping confidence in the broader market aloft.

The Dow Jones Industrial Average (^DJI), the benchmark S&P 500 (^GSPC), and tech-heavy Nasdaq Composite (^IXIC) were all little changed at the open.