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Business News/ Ai / AI Mania Powered Stocks This Year. Can Nvidia Spark More Gains?
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AI Mania Powered Stocks This Year. Can Nvidia Spark More Gains?


Expectations are high for the chip maker’s earnings report due Tuesday. Nvidia’s earnings beat Wall Street expectations in 19 of the past 20 quarters.

Jensen Huang, Nvidia’s CEO, has said that tech advancements are ushering in ‘a new computing era.’Premium
Jensen Huang, Nvidia’s CEO, has said that tech advancements are ushering in ‘a new computing era.’

There is a lot riding on the earnings report this week from Nvidia, both for the company’s ebullient investors and the entire stock market.

Nvidia has been the big winner of the bet that artificial intelligence is the next big thing in tech, the so-called AI trade that surged in popularity after OpenAI’s release of its ChatGPT app. The chip maker’s shares have more than tripled this year, contributing to a sizable portion of the S&P 500’s 18% rise.

Tech giants and startups alike are spending billions to develop AI technology. Because Nvidia’s semiconductors are central to such efforts, it has been the main beneficiary. Chief Executive Officer Jensen Huang has said the technological advancements are ushering in “a new computing era," and the company’s market cap has pushed above $1 trillion.

Hopes that AI could eventually help a range of other companies boost revenue and slash costs have given investors a reason to own stocks—especially the biggest tech companies—in 2023.

Expectations for Nvidia’s earnings report due Tuesday are sky high. Wall Street analysts are forecasting sales of $16.2 billion and a profit of $7.2 billion. A year ago, the company booked sales of $5.9 billion and earned $680 million.

One reason for the optimism: Nvidia beat forecasts in 19 of the past 20 quarters, according to FactSet. It is why the company’s outlook will be key in how the stock reacts. Wall Street is projecting revenue to reach $22 billion a quarter by the fall of 2025.

“Investors want to see some reassurance that this really high growth rate is a multiyear secular theme," said Matthew Stith, a portfolio manager at Bartlett Wealth Management.

The stock cooled in recent months after the U.S. restricted China’s ability to buy advanced semiconductors. But shares regained their momentum in November after fresh economic data fueled investor hopes that the Federal Reserve’s campaign of rate increases will bring down inflation without triggering a recession, a scenario known as a “soft landing." Its shares recently clinched a 10-session streak of gains, the longest stretch since 2016, and are back near their record high.

Individual investors have also ramped up purchases of stocks known as the Magnificent Seven—Nvidia, Alphabet,, Apple, Meta Platforms, Microsoft and Tesla, according to figures from Vanda Research.

Others are positioning through options. Some of the most popular trades in recent sessions have been calls pegged to Nvidia shares jumping to $500 or $505, according to Cboe Global Markets data. Shares closed Friday at $492.98. Calls give the right to buy shares at a specific price, later in time.

“It can be an explosive move," said Julien Stouff, founder of hedge-fund firm Stouff Capital. He’s among those using options to bet on bigger gains ahead for Nvidia.

In May, Nvidia shares jumped 24% after it reported earnings that easily topped expectations and gave a sales forecast that was far higher than Wall Street had figured. The results kicked the stock-market frenzy around artificial intelligence into high gear.

Nvidia has accounted for 14% of the S&P 500’s total return through Wednesday, according to S&P Dow Jones Indices.

For the third quarter, Nvidia and, which reported results last month, are expected to be the largest contributors to the S&P 500’s earnings growth. Without them, the index’s earnings would be on track to record a 1.5% gain for the period, rather than a 4.1% gain, according to FactSet data.

Analysts who cover Nvidia are expressing few doubts. Forty-nine of the 52 analysts rate the stock buy or outperform, and the remainder say hold, according to FactSet. The group has an average price target of $655.60, up about 33% from its current price.

But the overwhelmingly bullish sentiment is itself cause for concern among some investors. “In the longer run, a lot has to go right and nothing can go wrong," said John Goltermann, chief investment officer at Townsend & Associates.

Write to Charley Grant at and Gunjan Banerji at

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