Nvidia's market dominance may be threatened by low-cost competitors. | Credit: Getty Images
Key Takeaways
- Nvidia’s (NVDA) latest earnings report will come out on May 22. The forecast is $5.58.
- The NVDA price has been positively correlated with the crypto market for over a year.
- Is there a relationship between AI Tokens and the NVDA price movement and earnings?
The NVDA price has increased by nearly 100% since the start of the year, outperforming Bitcoin’s (BTC) 70% increase. Nvidia’s quarterly earnings report will come out on May 22. Its Earnings-Per-Share (EPS) have been higher than forecasted for the past five quarters.
Since Nvidia is driving artificial intelligence (AI) innovation with its Graphic Processing Units (GPU), it is worth looking at the correlation between its earnings, stock price and that of AI-related cryptocurrencies.
NVDA Historical Earnings, Correlation to Crypto
The last time EPS came lower than expected was in November 2022, when the actual EPS was $0.58, as opposed to the $0.71 forecast. The earnings per share are forecasted to increase to $5.58 when the new earnings report comes out on May 22.
The impressive increase in Nvidia’s EPS was triggered by an increase in demands for its graphic processors because of their importance in training artificial intelligence models. This has caused a similar increase in the NVDA stock price. Its newest GPU, Blackwell could be transformative for the AI industry.
Nvidia and cryptocurrency are correlated because Nvidia’s state-of-the-art AI and GPU technologies enhance trading automation, predictive insights, and mining efficiency, driving innovations in both fields.
Nvidia’s GPUs provide the computational power necessary for sophisticated AI applications and efficient cryptocurrency mining, creating a mutually beneficial relationship that drives growth in both areas.
This is clearly visible when charting the NVDA (white) and the Total Crypto Market Cap (TOTALCAP) (orange) prices side by side over the past year. They have an almost identical increase at 120% and the price movement nearly mirrors each other.
The correlation coefficient (blue) confirms this relationship. The indicator has been positive throughout the majority of the year. It has been close to 1 for several months, implying a perfect correlation between the two.
Since NVDA has a big use case in artificial intelligence, it is also worth looking at the correlation between AI tokens and NVDA. Additionally, since the NVDA earnings report data comes out on May 22, it is worth looking for potential reactions at the time the report comes out.
How Did AI Tokens React to NVDA Earnings?
As outlined in the previous section, NVDA earnings came higher than expected in the past five quarters. Interestingly, the price of the basket of AI tokens increased twice (green) and fell thrice (red). So, AI tokens have not reacted to the NVDA earnings report in the past.
Interestingly, the correlation between the NVDA price (white) and the basket of AI tokens is weaker than that between NVDA and TOTALCAP. The basket of AI tokens has greatly outperformed NVDA, increasing by nearly 500% to the latter’s 115%.
The correlation coefficient shows more time in negative correlation compared to the same indicator for NVDA and TOTALCAP. So, despite its use-case in artificial intelligence, the NVDA price has a weaker correlation to AI cryptocurrencies than with the overall cryptocurrency market.
So, previous history suggests that the NVDA price movement is related to the cryptocurrency market movement. However, this correlation is weaker in AI tokens. Additionally, AI tokens do not react to higher-than-expected EPS for NVDA.
Who is Leading the Charge for AI Tokens?
There does not seem to be a correlation between NVDA and AI tokens, especially when analyzing their movement the day EPS comes out. The basket of AI tokens has performed middlingly, increasing by 25%.
Upon closer inspection, it is clear that some AI tokens have rallied exceptionally well. But, there are others lagging behind, dragging down the performance of the entire sector.
More specifically, RNDR and GRT are ahead with increases of 52 and 42%, respectively. However, TAO trails with an increase of only 9%.
No Correlation Between NVDA and AI
Interestingly, there has not been a correlation between AI token performance and the NVDA earnings report. More crucially, the NVDA price has a weaker relation to the basket of AI tokens than it does to the overall cryptocurrency market. The AI token basket performance is dragged down by TAO, while RNDR is leading the charge.
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