Next week (starting 17 November) is shaping up to be a big week for stock market investors. Not only will the world’s largest company Nvidia (NASDAQ: NVDA) report its earnings but we’ll also get some important economic announcements and earnings from some other leading companies.
Here are a few things to watch out for.
The health of the US consumer
I’ll get to Nvidia’s earnings in a minute, but first I want to highlight the fact that US retail giant Walmart will be posting its earnings on Thursday. While most UK investors don’t have direct exposure to this stock, its earnings could still have ramifications for their portfolios.
The reason why is that Walmart’s earnings are widely considered to be one of the most important bellwethers for the US economy. Given that the company is the largest physical retailer/grocery business in the US, its performance provides a real-time look into the health of the American consumer.
If these earnings signal that consumer spending is slowing down, it could hit a range of retail stocks including the likes of Amazon, JD Sports Fashion, Nike, and Lululemon.
At the same time, weak earnings from Walmart could potentially boost defensive stocks such as Unilever, Reckitt, and Johnson & Johnson. These kinds of companies are not as economically sensitive as others.
So, this report is definitely something to watch out for. It will be posted during the day on Thursday.
Important economic data
Now, next week isn’t a huge week for economic data/reports. But there are a few key things to watch out for.
One is the US Federal Reserve’s meeting minutes, which will be posted on Wednesday. This will provide insight into Fed officials’ thoughts on inflation and the future path of US interest rates.
Another is UK CPI inflation. This will also be posted on Wednesday and it could provide clues in relation to the direction of UK interest rates.
Nvidia’s earnings
Turning to Nvidia’s earnings, which will be posted after the US market closes on Wednesday (a little after 9pm for UK investors), these are likely to be the biggest area of focus for investors next week. Because the artificial intelligence (AI) theme has been the key force driving the market higher this year and Nvidia is the biggest and most important player here.
In terms of what investors and analysts will be looking for here, they’ll want to see:
- Strong revenue and earnings growth: analysts are expecting revenue of $54.8bn (up 56% year on year) and earnings per share of $1.25 (up 60%).
- Strong data centre growth: this is forecast to come in at $48.6bn, up 58% year on year.
- Strong guidance: if guidance is below expectations, the stock is likely to experience weakness.
- Commentary on important issues: some areas of focus here will be Blackwell chip ramp up, robotics and self-driving car growth, and China revenues.
Note that if Nvidia’s earnings are disappointing, it could impact a range of tech stocks including AMD, Broadcom, and Taiwan Semiconductor. It could also result in market-wide weakness given that the stock has a large weighting in major indexes.
If Nvidia’s share price drops significantly, however, I’ll be looking at it as a buying opportunity. Taking a medium-term view, I have a price target of around $250.
