All eyes on Nvidia earnings as AI boom reaches historic proportions All eyes on Nvidia earnings as AI boom reaches historic proportions All eyes on Nvidia earnings as AI boom reaches historic proportions

All eyes on Nvidia earnings as AI boom reaches historic proportions

Equities 10 minutes to read
Peter Garnry

Head of Equity Strategy

Key points:

  • Nvidia's Q4 earnings are highly anticipated: Analysts expect record-breaking revenue and EPS growth due to the strong AI demand.

  • Uncertainty surrounds the report: While Nvidia usually beats estimates, geopolitical risks and potential overvaluation raise concerns.

  • AI theme drives markets: The AI sector is experiencing explosive growth, reflected in Nvidia's success and a basket of related stocks.

  • Bubble-like tendencies observed: Similar to past tech booms, there's a sense of FOMO and potentially inflated valuations in AI stocks.

Will Nvidia finally indicate the AI boom is cooling?

There is probably not an earnings release more important for equity market sentiment right now than Nvidia’s FY24 Q4 earnings (ending 31 January 2024) out Wednesday night after the US equity market close. With the AI boom being stronger than ever and spreading to more and more stocks all eyes will be fixated on this earnings release. Analysts expect revenue of $20.4bn up 238% y/y and EPS of $4.60 up 613% y/y in what is probably the most extraordinary increase in a mega cap business ever recorded. We have never seen a $1trn market value company with 12-month revenue of $45bn and a net profit margin of 55% grow at these blistering growth rates.

The chart below shows Nvidia’s quarterly revenue and analyst estimates projecting quarterly revenue to hit more than $25bn within the next year. This level of revenue is around four times the level in late 2022 when Nvidia was hit by a collapsing demand from Bitcoin mining due to falling Bitcoin prices and generally lower technology spending as Silicon Valley was adjusting to higher interest rates.

If we take a look at the geographical revenue split we can see that it is really the US segment that has taken off in the previous two quarters followed by strong growth in Chinese and Taiwanese sales. Singapore was once again separately split out in the previous quarter accounting for 15% of revenue. This is naturally odd and it is clear Singapore is used as a legitimate hub for re-exporting of Nvidia chips to countries were export controls may apply. As we have highlighted in the past a significant amount of Nvidia revenue comes from China and Singapore (37% of revenue) which given the ongoing trade frictions and potential Trump election win later this year could become a key geopolitical risk for Nvidia.

Will Nvidia beat estimates and how is the market positioned? Nvidia has beat on revenue and EPS in the past 7 of 8 earnings releases and the recent signals from Arm and other companies in the AI ecosystem are not suggesting growth is slowing down in the short term. We are leaning towards the view that analysts will once again underestimate Nvidia’s growth, but uncertainty is 2.5x larger than normal around this earnings release. The normal average 1-day move around Nvidia earnings is 4.3% but equity options are pricing 10.5% this time. To get a sense of the explosive growth in cumulative AI performance we are highlighting a slide from Nvidia’s recent investor slide deck (see below).

What about Nvidia’s valuation. Can the outlook justify it? As we pointed out in a recent equity note on Arm shares, both Arm and Nvidia are valued significantly above the market, which is not strange given the underlying growth in AI chips. But is it too much? It depends of course on the underlying assumptions for the future. NYU professor Aswath Damodaran, one of best on equity valuations, recently wrote about the magnificent seven and said this about Nvidia:

“…Nvidia and Tesla, where questions remain about what the end game will look like, in terms of market share. Historically, neither the chip nor car businesses have been winner-take-all businesses, but investors are clearly pricing in the possibility that the changing economics of AI chips and electric cars could alter these businesses.

Later in the article, Damodaran says explicitly that Nvidia looks overvalued despite factoring significant AI growth into his valuation models before serving a contradiction as he owns shares in Nvidia.

Source: Nvidia investor presentation

The AI theme is a key engine for equity markets

The past year has been all about the evolving AI theme powering equity markets higher. Our AI theme basket consists of 20 stocks that have a high degree of exposure to the AI boom representing $10trn of market value which is around 16% of the MSCI World Index market value. As the table below shows, it is a group companies enjoying close to double digit growth rates and strong profit margins. Analysts also remain bullish overall on AI related stocks and the average 5-year total return is significantly above the market.

If we take a look at revenue growth for this group of AI related stocks then we can see why the market is getting excited over this theme. Median revenue growth excluding Nvidia bottomed out in Q2 2023 at 2% y/y and has so far rebounded to 8.4% y/y in Q4. If Nvidia is included in the calculation then revenue growth rose to 15.3% y/y in Q3 and will undoubtedly rise again in Q4.

The AI sentiment also seems to have reached proportions not seen since the 2021 tech bubble and the dot-com period. Two stocks, Arm and Super Micro Computer, have increased 102% and 197% respectively since 14 September 2023 with the big jump coming this year. There is really a sense of fear of missing out (FOMO) in AI related stocks. But with all important long-term technologies the beginning has its bubble-like tendencies as we get too excited in the short-term and extrapolates too much. The recent news flow from OpenAI’s latest AI programme called Sora, that can render detailed videos of greater length than ever from text input, is an example of the incredible hype and excitement over AI technology. This AI boom will likely not be any different from previous cycles.

Super Micro Computer and Arm share price indexed | Source: Saxo

Key earnings this week

Besides the important earnings release from Nvidia the market will also get earnings from Walmart (Tue, bef-mkt) and Home Depot (Tue, bef-mkt). Analysts estimates 4% revenue growth for Walmart and EPS of $1.65 down 4% y/y as cost pressures continue to weigh on Walmart’s results. Home Depot is expected by analysts to report another quarter with negative revenue growth (consensus is looking for -3% y/y) as higher interest rates continue to subdue demand in the US home improvement industry. Home Depot is also expected to report EPS of $2.77 down 16% y/y.

This week is also a major week for global mining giants such as BHP, Rio Tinto, and Glencore. Iron ore prices were on average 19% higher in USD terms in 2H 2023 compared to the same period a year before and thus analysts expect positive growth rates for both BHP and Rio Tinto. The Bloomberg Industrial Metals Index, which is a broader measure of industrial metals prices, is down on average in 2H 2023 compared to the same period last year and as a result analysts expect Glencore to report revenue down 6% in 2H 2023.

The list below highlights all the major earnings releases this week:

  • Tuesday: BHP, Air Liquide, Medtronic, Walmart, Palo Alto Networks, Home Depot, Barclays, Antofagasta
  • Wednesday: HSBC, Rio Tinto, Glencore, Analog Devices, Nvidia, Synopsys, BAE Systems, Nutrien, Rivian
  • Thursday: Fortesque, Zurich Insurance, Nestle, AXA, Booking, Copart, Intuit, MercadoLibre, EOG Resources, NU Holdings, Mercedes-Benz, Iberdrola, Pioneer Natural Resources, Danone, Anglo American, Wolters Kluwer, Rolls-Royce
  • Friday: Allianz, Deutsche Telekom, BASF
  • Saturday: Berkshire Hathaway

The Saxo 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 is not intended to and does not change or expand on this. 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 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 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 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 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 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 (

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo 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 or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

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. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

The information or the products and services referred to on this site 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 are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

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