Nvidia's stock is losing steam, and next week's earnings could underscore the risks

Nvidia's stock is poised to end a four-week winning streak, down 1.9% this week amid concerns that next week's earnings report may include weaker-than-expected guidance due to trade pressures, according to Bank of America analysts. The chip manufacturer's upcoming first-fiscal-quarter earnings are under scrutiny as potential headwinds emerge.

Analysis

Nvidia Corp. (NVDA) shares are exhibiting signs of weakening momentum, declining 1.6% in midday trading on Friday, which positions the stock to break its four-week winning streak with an anticipated 1.9% loss for the current week. This contrasts sharply with the previous week's significant 16% gain. The downturn coincides with heightened anticipation for Nvidia's first-fiscal-quarter earnings report, scheduled for next week. Notably, Bank of America analysts have expressed concerns, suggesting that trade pressures could result in 'messy' forward-looking guidance from the chip manufacturer. This cautious outlook from analysts, reflected in a moderately negative sentiment score (-0.5 overall, and -0.7 specifically for NVDA), highlights the market's apprehension regarding potential headwinds that could impact the company's near-term performance and outlook.

Key Decisions for Investors

• Investors should closely monitor Nvidia's upcoming earnings release, particularly focusing on management's guidance and commentary regarding the impact of trade pressures on future performance.
• Given the recent share price reversal and specific analyst warnings about potentially 'messy' guidance, a cautious stance may be warranted leading into the earnings announcement.
• Consider assessing risk exposure to NVDA, as the earnings report and subsequent guidance could introduce significant volatility based on the resolution of current uncertainties.