Great expectations: Nvidia has driven the stock market higher, but can it live up to the hype this week?
Great expectations
For much of this year, AI has been the driving force behind much of the positive stock market narrative. Now, that optimism is set to be tested, as Nvidia, the best performing stock in the S&P 500 Index in 2023, will report earnings on Wednesday.
Back in May, Nvidia told investors that it expected revenue in its second quarter of the year to be around $11bn. There’s nothing particularly unusual about doing that — companies offer this sort of guidance all the time — except that it was roughly 50% more than what analysts were expecting... which is particularly unusual. Indeed, that kind of increase would have been surprising even for a much smaller company, but for a giant like Nvidia, it's pretty much unheard of.
Right place, right time
Not by accident, Nvidia now finds itself in the perfect position to cash in on the AI boom, as demand for the company’s graphics processing units (GPUs), which can power large-language models and other machine learning tools, surges. For example, OpenAI’s models for the groundbreaking GPT-3 model were trained on Nvidia hardware.
So far, Nvidia shares have roughly tripled in value this year, taking the company to a $1 trillion valuation, and dragging much of the rest of the tech sector with it. Will it live up to the hype?
Related reading: Chartr's Sunday Deep Dive — Checking In On ChatGPT.
