Will Nvidia Stock Go Up After Earnings?

While it might not be the first thing you think of when trying to determine which companies to buy stock in, a company’s quarterly earnings report often proves to be one of the very best indicators of the company’s success or failure.

Four times a year, the company will release its numbers, clueing in retail investors and traders (and potential investors and traders, as well) on its revenue, growth, and net income over the past few months.

Often, these calls practically guarantee some major activity on the stock market as the company’s share price adjusts to the newly released information — in other words, these earnings calls will create price volatility.

Computer chip giant Nvidia (NVDA) has its next earnings call on August 18th, and it could be the catalyst to break towards new highs.

The Bull Case For Nvidia

It’s not hard to make a bullish argument for investing in Nvidia. In both Nvidia’s data center and its video game division, things are looking better than ever.

This fact has remained unchanged throughout 2020 and into 2021, which is a truly remarkable feat considering how many companies suffered as a result of the global spread of the coronavirus.

Indeed Nvidia chips are deeply embedded and relied upon in a host of key, fast-growing industries:

• artificial intelligence
• autonomous vehicles
• machine learning
• cloud computing
• gaming

Between January and December of 2020 alone, the company’s stock shot up over 100% — this rapid rise has continued into 2021, with the price per share rising from just over $60 in the beginning of January of 2020 to over $200 at the start of July 2021.

Revenue and net income are also both up for Nvidia compared to years past, which further pleases bullish investors betting big on the company’s continued success.

NVDA Earnings Estimates

By the end of Nvidia’s current quarter, a group of 30 analysts see the company having an average quarterly earnings estimate of $6.32 billion.

On the low end, experts have said $6.3 billion. On the high end, some experts have gone as far as estimating $6.42 billion.

As for the next quarter, those 30 analysts see their average earnings estimates rise to $6.52 billion, with $5.91 billion on the low end and $6.96 billion on the high end.

No matter whether the analysts are more optimistic or pessimistic on the range, they all seem to believe that Nvidia won’t be stopping its success story anytime soon. This should be reassuring to retail investors interested in the company because the takeaway is limited downside risk unless price gets too far ahead of valuation.

Nvidia Earnings Whisper Number

While these earnings estimates are the ones that get publicized, many experts partake in what’s known as the whisper number — the hushed estimate. 

This whisper number can often prove to be much closer to the true earnings numbers than the publicized estimates themselves, occasionally shaking up those post-earnings numbers quite a bit.

In Nvidia’s case, retail investors and traders should take note that the company’s whisper number is $6.27 billion, slightly below that average earnings estimate of $6.32 billion predicted for the upcoming earnings call. If the whisper number proves to be accurate, Nvidia’s stock could go down post-earnings as expectations fail to be met.

NVDA: The Bearish Argument

Nvidia has done so well as of late that there’s really only one thing driving a bearish argument, and that’s the potential impact that the decline of the coronavirus pandemic will likely have on the gaming industry.

While cases continue to rise again with the spread of variants globally, making it hard to imagine an eventual end to all of this, there will eventually come a time where cases decline for good.

With this “return to normal” will come a decline in time, money, and energy for some to continue gaming like they have been the past 18 months or so, which those on the bearish side argue will translate directly to Nvidia’s stock.

There’s also a risk of price running too far ahead of valuation, creating risk for investors who get in too late.

NVDA Post Earnings History

In the earnings reports of the past, Nvidia stock has typically gone up post-call — this has a lot to do with the fact that Nvidia often exceeds estimates due to its continued success in both the data and gaming industries.

Looking at the days that followed Nvidia’s last earnings call in May, the stock barely even faltered for a moment before continuing to climb higher and higher. However, after February’s call, Nvidia stock did dip quite a bit for a few days before trending back up.

Only time will tell if retail investors and traders will continue to be impressed by Nvidia’s earnings calls, perpetuating this post-earnings trend upwards, or if they will be disappointed by a surprise earnings whisper number coming into reality in the call and send the stock into a dip.

Will Nvidia Go Up After Earnings?

Looking at the contrast between what the expert analysts predict for Nvidia and the ever-so-slightly lower whisper number for the end of this current quarter, it will be interesting to see if Nvidia stock does end up rising after the earnings call.

If NVDA can exceed expectations as they’ve done in the past, then it will be no question that Nvidia will go up. If they fall short and end up reporting numbers much closer to the whisper number, then a dip is practically guaranteed.

Given the great odds in Nvidia’s favor, the incredible amount of support for the company, and the way Nvidia has gone up following past earnings reports, it seems more than likely that Nvidia stock is going to go up after this earnings call in August. The future is bright for Nvidia, but so is the present.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.