In today’s big story, we’re previewing what Wall Street expects heading into Nvidia’s earnings report this afternoon.

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Nvidia is set to post its fourth-quarter earnings after the bell in what could be the most important report of the season.

The chipmaker is the proverbial pick-and-shovel salesperson in the AI gold rush. Its GPUs play a crucial role in powering large-language AI models like ChatGPT.

Nvidia is also part of the all-encompassing “Magnificent 7”. But even within that elite group of Big Tech stocks, it’s set itself apart.

The world’s third most valuable company’s shares have skyrocketed 230% over the past 12 months. That performance has far outstripped the rest of the Magnificent 7. Only Meta has posted comparable returns during that timeframe, rising 170%.

Still, there’s a risk the semiconductor giant’s stellar run stalls. Regulations have limited Nvidia’s business in China, a market that accounted for 20% of its revenue in 2023. And when a stock jumps so quickly in a short period, there are always questions about whether its valuation is sustainable.

Business Insider’s Matthew Fox has a rundown on what Wall Street expects out of Nvidia’s earnings report.

The chipmaker’s customers’ recent successes could be a good omen. Other Big Tech stocks’ strong earnings results in the past few weeks, partially fueled by their investment in AI, serve as another feather in Nvidia’s cap.

“If AI is the next industrial revolution, then absolutely we could see Nvidia’s valuation surge continuing,” XTB research director Kathleen Brooks recently told BI.

One expert said that disappointing results could lead to a wider sell-off where stocks drop by as much as 10%, BI’s Aruni Soni reports.

Part of the issue is that investors are short of cash, making it more difficult for them to buy the dip if the market tumbles.

Some investing gurus have also been predicting that money will rotate out of the Magnificent 7 this year.

There’s also the question of whether people will continue to buy Nvidia. The company’s stock surpassed Tesla as the most-traded stock during the last 30 trading sessions, BI’s Phil Rosen writes.

“It could be one of the cases where it has good numbers, it bounces after the numbers, and everyone looks around and goes: who’s the buyer? Turns out no one is a buyer,” Academy Securities’ Peter Tchir said of Nvidia during a recent interview.

One person who won’t be buying Nvidia: Cathie Wood.

Wood’s Ark Invest has been selling its shares, and the polarizing investor said on Sunday that “expectations could be getting ahead of themselves ” for the AI darling.

That dismissal might end up being a blessing in disguise, rather than the kiss of death. A hellish two-year trading stretch means that Ark Invest has now destroyed $14.3 billion in wealth over the past decade, according to Morningstar estimates.

🔔 Before the opening bell: US stock futures fall in premarket trading as investors wait for Nvidia’s blockbuster earnings report.

2. UBS gets even more bullish on its market outlook. The bank raised its year-end S&P 500 target to 5,400, roughly 9% above current levels. According to an analyst note, the adjustment was partly fueled by higher inflation, which tends to be positive for stocks.

3. Strong job numbers may be deceiving investors. Wells Fargo strategist Erik Nelson thinks the labor market isn’t as robust as some of the latest data has made it out to be. Signs of weakness could encourage the Federal Reserve to slash interest rates sooner than expected, he said.

2. Established tech companies are dominating OpenAI’s new GPT Store. Firms like AllTrails, Canva, and Kayak all have popular GPTs. Leaders at each company explained how they found success on the GPT Store.

3. Interviewers won’t be able to tell if you use ChatGPT to ace coding rounds. Job candidates can easily pass certain rounds of the hiring process using OpenAI’s intelligent language tool, according to a recent experiment.

2. Amazon’s retail CEO stressed the importance of staying ahead in AI. In leaked audio from an internal all-hands meeting, Doug Herrington warned employees that Amazon must stay ahead of the change to remain successful.

3. EY and Deloitte are upping the heat. The accounting giants are reportedly scrutinizing employees’ workloads and letting go of “underemployed” staff in a bid to cut costs. The Big Four firms laid off thousands of workers last year in response to the challenging economic climate.

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Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, editor, in London. George Glover, reporter, in London.

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