Rate cuts, mood changes, and volatile commodity prices—especially copper and gold—are on the agenda alongside the release of central bank board meeting minutes from the Fed and the Reserve Bank, early results of the May survey of business activity in major economies, and 17 speeches or public appearances by senior Fed members in the US over the next five days. However, amidst this busy business schedule, the most significant event of the week remains the quarterly financial report for the first quarter.
AI chipmaker Nvidia is set to release its latest results for the three months ending in April on Wednesday (US time), posing a significant test of market momentum and investor sentiment. Nvidia's report, scheduled after the bell on Wednesday (or after 6 am Thursday Sydney time), is eagerly awaited by investors expecting another substantial increase in revenue and earnings.
Analysts anticipate Nvidia's revenue for the first quarter of fiscal 2025 to reach $US24.65 billion, marking a significant rise from the previous quarter and more than tripling from the year-ago period, according to consensus estimates compiled by Visible Alpha. Net income is expected to hit $US12.87 billion, slightly above the $US12.29 billion reported for the fourth quarter ending in January and considerably higher than the $US2.04 billion profit recorded in the April quarter of 2023.
Nvidia's report will conclude the earnings season for the so-called Magnificent Seven tech giants, which include Alphabet (Google), Amazon, Apple, Microsoft, and Amazon, all of whom reported solid figures, except for Tesla, which is under pressure due to the ongoing global price war in EVs.
Nvidia shares have surged by 92% year-to-date, with the market value reaching $US2.27 trillion on Friday, more than doubling in value over the last nine months.
The key point of interest will be any update on its new Blackwell B200 GPU chipset, rumored to process graphics and other data necessary for AI 30 times faster than its previous chip. Large language models for generative AI rely on Nvidia’s products, and no other company can match them in terms of design, manufacturing, and sales processes. Intel lags far behind, while companies like Alphabet, Apple, Amazon, and Meta purchase chips from external suppliers. Achieving parity with Nvidia would require years and tens of billions of dollars in new investment in their own plant, design, and sales processes.
While the current market boom may eventually end, analysts speculate whether a weak report from Nvidia could act as the catalyst. However, they note that Nvidia's current PE ratio of 35, while high, has decreased from 55 two years ago, despite soaring revenues and earnings over the past nine months.
Additionally, other notable companies reporting this week include leading retailers such as Target, Ross Stores, and TJX, while SQM, the world’s second-biggest lithium group, reports on Wednesday. Lowe’s Companies, America’s second-biggest hardware chain, also releases its report this week. In Europe, all eyes will be on Ryanair, the world’s largest low-cost airline.
Though typically dominant, key data, business surveys, central bank minutes, and economic statistics may take a back seat to Nvidia’s report, which is expected to confirm the ongoing AI boom. Nonetheless, the minutes of the last Fed meeting will still be closely watched, especially following over a dozen speeches and commentaries from Fed members or officials, starting with a speech from Chairman Jay Powell in Washington on Monday morning (5:30 am Sydney time).
In Australia, the minutes of the RBA policy meeting held a fortnight ago will be scrutinized for insights into interest rates and the central bank’s economic outlook for the year. As for statistics, it’s expected to be a relatively quiet week.
