Log in Open account
United Kingdom
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money. Losses can exceed deposits on some products.
Nvidia earnings will show another quarter of explosive growth Nvidia earnings will show another quarter of explosive growth Nvidia earnings will show another quarter of explosive growth

Nvidia earnings will show another quarter of explosive growth

Equities 4 minutes to read
Peter Garnry

Chief Investment Strategist

Key points

  • Nvidia's strong AI-driven growth: Nvidia is expected to report a significant revenue increase of 113% YoY for FY25 Q2, driven by high demand for its AI chips (Hopper H100 and H200). Analysts anticipate Nvidia will surpass consensus estimates and possibly raise guidance for fiscal Q3, indicating continued strong momentum in the AI industry.

  • Potential political and economic impact of a "Blue Sweep": Although still considered unlikely with a 10% probability, a "Blue sweep" in the upcoming elections could lead to corporate tax hikes, negatively impacting equity markets and valuations. A Harris victory with a split Congress remains the more probable outcome, affecting fiscal stimulus extensions in 2025.

  • Growing momentum for weight-loss drugs: Eli Lilly's Zepbound study shows promising results in preventing diabetes, reinforcing the growing demand for GLP-1 weight-loss drugs. This success could lead to more government and insurance support, further boosting the obesity drug market alongside AI and defense stocks.

Nvidia earnings: The AI growth wave is not ending yet

Nvidia earnings on Wednesday is by far the most important event in global equities. Analysts expect FY25 Q2 (ending 31 July) revenue to hit $28.7bn up 113% YoY and EBITDA of $18.9bn compared to $7.4bn a year ago. Given the underlying momentum in the AI industry and the results we have seen from other companies in the AI ecosystem, we lean in direction of Nvidia beating consensus and lifting guidance for fiscal Q3 surpassing estimates. Demand is still driven by its Hopper chips H100 and H200. Besides revenue guidance the market will anxiously look for an update of its Grace Blackwell 200 chip (GB200) which was scheduled for launch in Q4 2024, but has been postponed to Q1 2025 due to a design flaw. As the chart below shows, the momentum in estimated FY25 Q4 (ending 31 January 2025) revenue is still momentum and has increased from roughly $25bn in the beginning of the year to now $35bn. Our view is that the AI wave will continue until the next GB200 investment has run its course as Google, Meta, and Microsoft will take another bet on compute power to see what it can create in terms of models and new AI applications.

Is the “Blue sweep” scenario suddenly in play?

The “Blue sweep” scenario was unthinkable just one month ago, but with the Harris momentum in polls (see chart) it is no longer a fantasy. It is important to say that this scenario still has a low probability (around 10%). What would it means if we get a “Blue sweep”? Well, it would mean that Harris and the Democratic Party could more easily implement corporate tax hikes from 21% to 28% and just shave off a significant portion of after-tax free cash flows. That would obviously be negative for valuations and equity markets. For now the most likely scenario is a Harris victory with a split Congress which has implications for the macroeconomy in 2025 as it would make extensions of fiscal stimulus much more difficult.

Source: fivethirtyeight.com

Eil Lilly Zepbound study to bolster case for weight lose drugs

Together with AI and European defence stocks the obesity theme has been strong this year as demand is extremely high for the new class of weight-loss drugs Wegovy from Novo Nordisk and Zepbound from Eli Lilly. This week, Eli Lilly announced the results of a three-year long study following patients with the risk of developing diabetes. The study showed that those patients that were on Zepbound compared to the control group had a 94% less likelihood of developing diabetes. This is more evidence that the new GLP-1 weight-loss drugs are preventive as much as curing and thus will likely add support for more government incentives, but also incentivizing insurance companies to increase coverage for these weight-loss drugs.

The week ahead: Nvidia earnings, Germany inflation, and US initial jobless claims

  • Earnings: The key earnings to watch in the week ahead are PDD (Temu, Mon), Nvidia (Wed), and Salesforce (Wed). We have already previewed Nvidia above, so our focus here is on PDD and Salesforce. Analysts expect PDD to report Q2 revenue of CNY 100bn up 91% YoY as its e-commerce platform Temu continues roll over the world with great success connecting the global consumer directly to Chinese factories. PDD is also one of the few Chinese stocks that still have a positive sentiment around it. Salesforce is expected to report FY25 Q2 (ending 31 July) revenue of $9.2bn up 7% YoY as business spending on IT applications is still under pressure from cost focus and attention on AI investments.

  • Germany inflation: Important figures as they are fundamental for the ECB’s thinking on its policy rate path. Estimates are looking for Germany’s August inflation figures to hit 2.1% YoY down from 2.3% YoY in July confirming that inflation has eased and providing flexibility for the ECB to cut its policy rate by 25 basis points (the current market pricing) at the next rate decision meeting on 12 September.

  • US initial jobless claims: Not typically a macro figure we are talking about, but the past two weeks the figure has gotten more attention, because it is a timely indicator on the US labour market. Recent Fed speeches have highlighted US labour market weakness and impacted the market’s pricing of the future Fed funds rate, but the past two weeks, the initial jobless claims have confirmed that the weak July figures were temporary and driven by hurricanes and forced the market to scale back bets on rate hikes. US initial jobless claims are out on Thursday.

Previous weekly equity market updates

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article

  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article

  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article

  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article

  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Disclaimer

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 (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

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

Contact Saxo

Select region

United Kingdom
United Kingdom
Products & pricing
Platforms
Accounts & service
General
Other
Legal

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 is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo 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 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