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Nvidia Q4 Earnings Awaited Amid Concerns of S&P500 Consolidation

Last Updated February 20, 2024 5:41 PM
Shraddha Sharma
Last Updated February 20, 2024 5:41 PM
Key Takeaways
  • Anticipation built ahead of Nvidia’s Q4 earnings report, but the stock took a hit.
  • Market concerned about S&P500 consolidation, with the growth of tech giants
  • Nvidia recently solidified its position as the 4th largest US company.

Investor attention is fixated on Nvidia as the company prepares to unveil its Q4 earnings report on February 21. The report has significant market anticipation due to the company’s exponential growth.

However, the anticipation is coupled with broader concerns about S&P500 consolidation. Nvidia finds itself at the center after it became the 4th largest company by market cap in the US after surpassing Amazon. A day prior to the report, Nvidia’s stock surge was hit with a price drop. But Nvidia has positioned itself as a formidable player.

Nvidia Q4 Review

According to Business Insider, at least 37 analysts see an earnings estimate of $4.59 per share against last year’s quarterly figure of $0.880. The sales estimate comes to $20.40 billion, with an expected increase of over 200%.

As per analyst Matt Weller underlined the company’s impressive track record of beating analyst estimates in seven of the last eight earnings reports. However, despite Nvidia’s stellar performance, the stock experienced sluggishness in the lead-up to the financial review.

NVDA was marked by the RSI remaining below 30 on February 20 before a slight recovery. The stock also saw its largest drop in price in the past five days.

NVDA Trading Chart
NVDA Trading Chart | Source: TradingView

Concerns of S&P500, Nasdaq Consolidation

The market is increasingly worried about S&P500 consolidation. Recent analysis suggests that the US equity market is experiencing record levels of concentration. Journalist Holger Zschaepitz cited Deutsche Bank research in a post on X , explaining that today’s market concentration has surpassed peaks seen in 2000 and 1929.

Microsoft, Apple, Nvidia, Alphabet, and Amazon top the list, dominating 25% of the total capitalization of S&P 500. Concentration raises concerns about the market’s stability and the potential impact on individual companies like Nvidia.

Comparative Analysis and Market Positioning

Nvidia’s market dominance lies in its recent market expansion in AI and its capitalization, surpassing that of existing industry giants like Amazon. The company’s positioning in the AI sector has received significant investor attention. In February, Nvidia launched ChatGTP competitor RTX. Previously, it entered into a fundraising to back chatbot-builder Kore.ai. Reports are now suggesting that companies like Microsoft are trying to reduce their reliance on Nvidia.

Nvidia is now being likened  to Cisco’s pivotal role in powering the internet back in the day.

However, some analysts caution against overly optimistic comparisons, citing potential risks associated with market consolidation and commoditization over time.

 As per  data, Nvidia’s market value has moved beyond the entire capitalization of the S&P 500 energy sector.

What to Look For?

As Nvidia gears up for its Q4 earnings report, investors are monitoring the company’s performance amid broader market uncertainties.

With concerns regarding S&P500 consolidation, Nvidia’s positioning in the tech sector has become strong. Therefore, the financial results are again expected to show growth and surpass expectations.

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