Weekly Stock Spotlight: Nvidia Earnings – Santa or Grinch?

Key points:

• Market Faces Nvidia Earnings Test: Nvidia’s Q3 earnings due on Nov 20 will be a critical indicator for the AI investment narrative. With its massive market cap and leadership in AI, its performance could influence broader market sentiment as the S&P 500 struggles to hold post-election gains.
• Three Key Things to Watch: Data center growth for Nvidia depends heavily on hyperscalers like Microsoft, Google, and Meta. Watch for guidance on AI investments and adoption of Nvidia GPUs. But even more important will be the production updates on the Blackwell chip.
• Other Key Stocks to Monitor: Nvidia’s earnings could further impact SMCI, which is already under scrutiny due to accounting fraud allegations and potential delisting concerns. If Nvidia discusses diversifying its supply chain away from SMCI, it could heighten pressure on SMCI’s stock, signaling deeper risks for the company. Meanwhile, Palantir has been a standout performer in the US markets, buoyed by its transition from the NYSE to Nasdaq. This move brings the potential for inclusion in the Nasdaq-100, which could lead to significant passive inflows.

It might be a bit early for holiday vibes, but hey, why not? Let’s dive into Nvidia’s earnings and what they could mean for the AI hype this season.

The S&P 500 has erased its post-election gains, and Nvidia's earnings will serve as a major test, given its status as the largest company by market cap and a cornerstone of the AI revolution. The central question: Is the AI theme robust enough to sustain investor enthusiasm, or is it on shaky ground like a Trump 2.0 scenario?

Let start with some logistical details.

• Earnings due: Nov 20 (Wednesday) after market
• Revenue estimate: $33.21 billion, +83% YoY (vs. $30.04 billion in Q2 FY 2025)
• EPS estimate: $0.74, +85% YoY (vs. $0.68 in Q2)
• Gross margin: 75.02% (vs. 75.70% in Q2)

We highlight three key areas to watch as Nvidia reports earnings

Blackwell Production and Demand

The launch of Nvidia’s next-generation Blackwell chips has been the focal point of investor attention. Early signs suggest extraordinary demand, with analysts forecasting record sales and reports of sold-out inventories for the next year.

What to watch:

• Updates on production timelines and supply chain constraints for Blackwell.
• Confirmation of management’s earlier comments about supply being sold out for the next 12 months.

Potential reactions:

• Positive: If Blackwell is on track or surpasses expectations, Nvidia’s stock could surge to new highs.
• Negative: Any signs of production delays or demand falling short could pressure the stock, given its stretched valuation.

Guidance from Hyperscaler Customers

Nvidia's data center business is fueled by hyperscalers like Microsoft, Google, and Meta, which leverage Nvidia’s AI processors for generative AI applications. These partnerships account for a significant chunk of its revenue and margin growth.

What to watch:

• Updates on adoption rates for the H100 and H200 GPUs and the strength of Nvidia’s AI demand pipeline.
• Hyperscaler capex guidance—indications of continued investment in AI infrastructure could drive optimism.
• Insights into AI workload composition (training vs. inference) and the development of large language models in the cloud versus edge computing.

Potential reactions:

• Positive: Strong hyperscaler guidance and sustained demand for AI chips could bolster confidence in Nvidia’s ability to deliver outsized growth.
• Negative: A slowdown in hyperscaler spending or competition from AMD in the AI space might weigh on sentiment.

Impact of SMCI Delisting Rumors

Super Micro Computer (SMCI), one of Nvidia's key partners, is reportedly facing disruptions. SMCI is reportedly Nvidia’s third largest customer. Rumors suggest Nvidia may be shifting orders to other IT infrastructure providers, raising concerns about supply chain stability.

What to watch:

• Clarity on Nvidia’s relationship with SMCI and any diversification efforts to mitigate risks.
• Potential ripple effects on Blackwell’s production timeline and deliveries.

Potential reactions:

• Positive: Reassurance that Nvidia has mitigated SMCI-related risks could restore confidence.
• Negative: If SMCI issues create bottlenecks, investors may grow wary of Nvidia’s execution capabilities.

Actionable Strategies for Long-Term Investors

Nvidia remains a critical AI play, but for investors to navigate near-term volatility requires strategy:

1. Focus on AI’s Broader Growth Story: While quarterly results matter, Nvidia's leadership in AI training, inference, and edge computing positions it for sustained growth.
2. Diversify Exposure Through AI ETFs: Consider ETFs like the Global X Robotics & AI ETF (BOTZ) or iShares Exponential Technologies ETF (XT) to gain diversified exposure to the AI ecosystem, reducing single-stock risk.
3. Buy on Dips: If earnings trigger a pullback, it could be an opportunity to accumulate Nvidia shares at more attractive valuations, assuming the AI thesis remains intact.
4. Monitor Emerging Competitors: AMD’s advancements in the GPU space signal rising competition. Stay updated on how Nvidia defends its market share in this evolving landscape.

By keeping an eye on these trends and incorporating a diversified approach, investors can navigate Nvidia’s high-growth but high-volatility profile effectively.

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