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For the past few years, Nvidia’s (NVDA) quarterly results have been circled on calendars as perhaps the marquee event of the earnings season.
Coming in fashionably late weeks after its «Magnificent Seven» peers have opened their books, Nvidia has the final say on the AI trade until the next quarter. Even without this drama, it’s been the most important stock in the S&P 500, epitomizing the AI trade more than any other.
And, of course, the AI trade has been the dominant trend since the introduction of ChatGPT, powering the flagship index as much as the large-language models.
But next week’s report may hit a bit differently. The chipmaking giant is due out with its numbers after the close next Wednesday, Feb. 26. But it no longer feels like the gyre ‘round which the market turns.
That’s in part because the much-anticipated broadening of the market is finally happening. Our Jared Blikre crunched the numbers, and Nvidia has contributed about 5% to the S&P 500’s gains this year, compared with 20% for 2024.
Indeed, the complexion of the S&P 500 winners this year has changed quite a bit overall.
The top contributors to the rally have been Meta (META) (13.3% as of Wednesday’s close), Nvidia, Walmart (WMT) (4.8%), JPMorgan (JPM) (4.6%), Amazon (AMZN) (4.1%), Palantir (PLTR) (4%) and Eli Lilly (LLY) (3.9%).
It’s a sharp contrast with 2024, when the Magnificent Seven alone accounted for 55% of the S&P 500’s gain.
While the benchmark index was closing at a new record high this week, Nvidia shares were still trading more than 5% below the record high close from Jan. 6.
Then there’s Nvidia’s slowing growth trajectory. The company’s first AI-assisted blowout quarter shocked the market in 2023. Revenue kept climbing and the company kept beating estimates, with peak sales growth so far of 265% in the fiscal fourth quarter of 2024.
The estimated increase this time around is 73% — huge by any normal measure of a company, let alone one of Nvidia’s size, but a sharp slowdown from the go-go days of 2023 and 2024. And even when Nvidia’s numbers wow investors, the stock price doesn’t always follow suit because of forecasts or commentary around supply struggling to keep up with demand. Still, better to have not enough supply than not enough demand.
Last quarter, Nvidia shares rose just 0.5% the day after it reported. In the period before that, the stock slumped 6.3%. In both instances, the S&P 500 was little changed.
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