US stocks fell on Wednesday ahead of Nvidia’s (NVDA) earnings, seen as a crucial litmus test for the artificial intelligence trade that could set the direction of markets for days to come.
The Dow Jones Industrial Average (^DJI) was down about 0.3%, while the benchmark S&P 500 (^GSPC) fell about 0.8%. Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) slipped about 1.2%, following a mixed day on Wall Street on Tuesday.
Investors are counting down to Nvidia’s results after the bell, hoping the last of the “Magnificent Seven” tech megacaps to report can provide some fresh momentum for stocks. It’s seen as a reality check on just how important the AI poster child (and its cousins) are to the two-year bull market.
The $3.61 trillion chipmaker, now the world’s most valuable company, has seen its stock surge 200% this year so far, hitting record highs after the presidential election. The European Central Bank has warned of a bubble in AI stocks amid high concentration and the risk that lofty earnings hopes won’t be met.
Nvidia’s share price was down more than 2%, after surging on Tuesday to buoy the Nasdaq to a win. Traders are bracing for a potential post-earnings swing of 8% — or $300 billion in market value — in either direction, going by options markets.
Elsewhere in corporates, Target (TGT) muted its outlook for holiday-season sales and profit after posting a big quarterly profit miss and slashing its full-year guidance. The retail giant’s shares sank more than 21% after the earnings.
Meanwhile, bitcoin (BTC-USD) prices were up more than 3% to hit a fresh record near $94,500 per token. Optimism for a crypto-friendly Trump White House has spurred the digital currency’s recent rally.
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Nvidia stock’s long streak of post-earnings success
Nvidia (NVDA) is set to report earnings on Wednesday after the bell. Expectations — as they have been for more than a year now — are monstrous. Nvidia is expected to report Q3 earnings per share of $0.74 on revenue of $33.2 billion, according to analysts’ estimates compiled by Bloomberg. Both metrics would mark a more than 80% increase compared to the same quarter a year ago.
Nvidia has been consistently surpassing analyst estimates every quarter since OpenAI launched ChatGPT in November 2022. The AI chip leader’s stock reaction has been more mixed in the day following earnings announcements as expectations have grown lofty, but it hasn’t fallen two quarters in a row on the day following its earnings release since the middle of 2021.
“The company hasn’t had a negative price reaction in back to back post earnings release days since [the first quarter of 2021], when GenAI wasn’t a phrase in investors’ dictionary,” Julian Emanuel, who leads the equity, derivatives, and quantitative strategy team at Evercore ISI, wrote in a note to clients on Sunday. “A positive reaction following the 11/20 release, following the negative move last quarter, could help cushion the S&P 500’s decline somewhat near term but is more likely to refocus investors on the long term story.”
Today at 3:00 PM UTC
Target falls more than 20% after cutting full-year profit outlook
Target (TGT) stock tanked in early trading on Wednesday, falling more than 20% after the retail giant slashed its full-year guidance and missed Wall Street’s estimates for both earnings per share and revenue in its third quarter.
Before the bell, Target said it now expects full-year earnings per share in a range of $8.30 to $8.90, below its prior range of $9.00 to $9.70. The new guidance also came in well below the $9.61 earnings per share that Wall Street had expected.
The retailer also took a cautious stance on prospects for the holiday shopping season. Read more on Target’s quarter from Yahoo Finance Executive editor Brian Sozzi here.
Today at 2:36 PM UTC
Stocks mixed at the open, Nvidia slides
US stocks wavered on Wednesday ahead of Nvidia’s (NVDA) earnings, seen as a crucial litmus test for the AI trade that could set the direction of markets for days to come.
The Dow Jones Industrial Average (^DJI) was up about 0.2%, while the benchmark S&P 500 (^GSPC) hugged the flat line. Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) slipped about 0.2%, following a mixed day on Wall Street on Tuesday.
After surging on Tuesday amid increased optimism surrounding the stock ahead of earnings, Nvidia shares slid more than 1% in early trade.
Today at 2:20 PM UTC
Comcast to spin off TV networks including MSNBC, CNBC
Comcast (CMCSA) is looking to play offense in the ever-evolving media landscape. On Wednesday, the company said that it will spin off most of its cable networks into a new publicly traded company called SpinCo.
The stock jumped as much as 3.5% in premarket trading before paring those gains.
The new venture will house the majority of NBCUniversal’s cable television networks, including USA Network, CNBC, MSNBC, Oxygen, E!, SYFY, and Golf Channel. Those networks collectively generated about $7 billion in revenue over the past 12 months, Comcast said in its announcement.
Comcast’s Peacock streaming service and the NBC broadcast network will remain under the parent company.
“This transaction positions both SpinCo and NBCUniversal to play offense in a changing media landscape,” said Comcast president Mike Cavanagh.
