background image background image background image

Earnings Watch: Will NVIDIA's Q3 earnings mark the top?

Equities 8 minutes to read
Peter Garnry

Head of Saxo Strats

Summary:  As the corporate earnings season approaches its final lap, Saxo's Peter Garnry takes a closer look at three key bluechips – Home Depot, Tencent and NVIDIA

The Q3 earnings season is losing steam with only 126 companies reporting earnings next week out of the 2,000 companies we track during the period. 90% of the companies in the S&P 500 Index have already reported earnings with positive earnings surprise across all sectors. In our previous Earnings Watch publications we have highlighted the earnings weakness in Europe, but the recent string of earnings releases have helped improving there. Revenue growth y/y is slightly higher in Q3, following dismal growth in the two previous quarters. 

Today’s Earnings Watch publication focuses on Home Depot, Tencent and NVIDIA. The US housing market has been soft in the past year as mortgage rates have climbed on the back of tighter monetary policy. Home Depot’s earnings may be a first warning shot on housing cooling in the US as home improvement is partly driven by housing sentiment and the ability to take home equity loans.

Tencent is the worst performing large technology stock globally this year as China’s gaming addiction curb has hit sentiment hard with shares down 33% year-to-date. Tencent’s Q3 earnings are important for investor sentiment in China and Asian equity indices due to its index weight.

NVIDIA has been riding the boom in the semiconductor industry for years and last year saw a big boost from crypto mining operations. The big question is whether the comparables are getting too tough to beat and whether the semiconductor industry is hitting an intermediate peak here. Our view is that the US-China trade war will not see a deal anytime soon and the semiconductor industry is a strategic industry for both countries so the global supply chain in this industry could come under severe pressure in 2019.

Home Depot

The largest US home improvement retailer is set to report Q3 earnings on Tuesday at 14:00 GMT with analysts expecting EPS $2.27 up 23% y/y and revenue $26.3bn up 5%. The US housing market is already cooling so it naturally begs the question when it spills into home improvement. Our expectation is that things will turn for the worse in 2019 and with that activity in the US housing market in general, including home improvement. Home Depot has managed to increase its share price since the Great Financial Crisis through a combination of significantly higher operating margins and shares repurchases engineering very high EPS growth. Any negative change to the outlook from Home Depot should be noted by investors as the US housing market is important for the overall market in the US.

Tencent Holdings

China’s most iconic technology company reports Q3 earnings on Wednesday with analysts expecting EPS 1.99 up 10% and revenue at CNY 80.8bn up 24% showing profit margin squeeze expected. While still impressive growth rates analysts have lowered their Q3 EPS estimate 15% in the past six months as the new Chinese regulation to curb gaming addiction has hit growth expectations. The recent developments indicate that starting in the new year children under 18 years will only be allowed by law to play games for up to two hours per day. This will undoubtedly have implications for Tencent profit growth that has been linked to gaming revenue. The recent mobile-gaming sales figures in China also show that Tencent’s growth has flatlined.


The company reports Q3 earnings on Thursday after the close with sell-side analysts expecting EPS $1.92 up 44% y/y and revenue $3.24bn up 23%. Analysts have lowered their Q3 EPS estimate by 4% in the past six months as the US-China trade war has become more negative. As the chart below shows, the semiconductor industry has been through an expansive period with EPS up more than 100% in the past two years. Our view is that growth is peaking and that semiconductor stocks will disappoint in 2019 across the board as the tension between the US and China will rise. Many investors are sitting on 100% gains in global semiconductor stocks and with the industry down 6% year-to-date we recommend investors to rethink their exposure to this industry. NVIDIA’s Q3 results are a key indicator for the industry. AMD’s Q3 disappoint is also worth taking into account ahead of NVIDIA’s results.
Source: Bloomberg and Saxo Bank


The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research 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. To the extent that any content is construed as investment research, you must note and accept that the 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 under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (
- Full disclaimer (

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992