Earnings Watch: Can Nvidia surprise?

Equities 5 minutes to read
Peter Garnry

Chief Investment Strategist

Summary:  This week's key earnings releases? Baidu, Airbus, and Nvidia, with the latter chipmaker in focus on pronounced softness settling into some of its key business segments.


The Q4 earnings season is 75% done in the US and the European earnings season is kicking into gear this week and next. Overall, the picture is as expected: US earnings growth is strong although slowing while European and Asian growth is weak. This week sees around 330 of the 2,000 companies we track reporting earning with this edition of Earnings Watch focusing on the most important earnings releases relative to sentiment.

Baidu

As with so many other Chinese technology companies, Baidu is expected to show profit margin pressure in its Q4 numbers as the company is paying more for attracting traffic; its subsidiary iQiyi (China’s answer to Netflix) is also still burning significant cash flow on original content production.

The upside catalysts remain mobile monetisation and a more disciplined investment plan improving operating margins. The main downside risks remain costs related to traffic acquisition and rising costs associated with its online-to-offline businesses.

Baidu reports Q4 earnings on Tuesday with analysts expecting EPS at  CNY 12.05, down 19% year-on-year, and revenue of CNY 26.4bn up 12% y/y. Sell-side analysts remain extremely bullish with a consensus price target at $230.77, around 36% above Friday’s closing price.

Airbus

The juggernaut in the European aerospace and defense industry delivered against its targets in 2018 with the A320 showing especially strong growth figures. The market is expecting Airbus to show strong numbers over the coming years with improving EBITDA margins. Investors will focus on the company’s Asia-Pacific business – around 37% of the overall business – given the recent weakness in the region and China slowing down.

Airbus reports Q4 earnings on Thursday before the market opens with analysts expecting EPS of €2.06 and revenue of €22.7bn, down 15% y/y

Nvidia

The company delivered a profit warning in January on weaker-than-estimated demand in its gaming and datacenter segments. China was highlighted within the gaming segment and this creates an inventory risk for Nvidia. On the datacenter front, growth is slowing down faster than initially thought, something competitor Intel also shared with the market a week before Nvidia’s announcement; one cannot help but think that technology growth is adjusting lower faster than the most positive analyses hinted a few months ago.

The auto segment is a smaller one for Nvidia but has been highlighted as a long-term growth catalyst. Several company announcements, from Apple to Waymo, indicate that self-driving technology will take longer to mature than once thought, and any credible analysis should lower growth expectations in this segment. It is against this soft outlook that Nvidia is reporting earnings this week.

Nvidia reports FY'18 Q4 (ending December) earnings on Thursday with analysts expecting EPS at $0.87, down 49% y/y, and revenue of $2.32bn down 20% y/y.

Sell-side analysts remain very positive with a consensus price target of $176.21 – around 19% higher than Friday’s close. Despite the short-term soft outlook Nvidia, still remains the most interesting method of exposure to the gaming and datacenter industries.
 
Nvidia (weekly)
NVidia (weekly, source: Saxo Bank)
Earnings calendar

Quarterly Outlook 2024 Q4

01 /

  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Head of FX Strategy

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • FX: Risk-on currencies to surge against havens

    Quarterly Outlook

    FX: Risk-on currencies to surge against havens

    Charu Chanana

    Head of FX Strategy

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo...
  • Equities: Are we blowing bubbles again

    Quarterly Outlook

    Equities: Are we blowing bubbles again

    Peter Garnry

    Chief Investment Strategist

    Explore key trends and opportunities in European equities and electrification theme as market dynami...
  • Macro: Sandcastle economics

    Quarterly Outlook

    Macro: Sandcastle economics

    Peter Garnry

    Chief Investment Strategist

    Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p...
  • Bonds: What to do until inflation stabilises

    Quarterly Outlook

    Bonds: What to do until inflation stabilises

    Althea Spinozzi

    Head of Fixed Income Strategy

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...
  • Commodities: Energy and grains in focus as metals pause

    Quarterly Outlook

    Commodities: Energy and grains in focus as metals pause

    Ole Hansen

    Head of Commodity Strategy

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.