If I were to ask investors what the biggest and best name in stocks has been this year, it’s clear Nvidia (NASDAQ:NVDA) would likely be the best answer. Shares have surged to all-time highs in 2024. And even now the stock is up by about 50% year to date.
However, some of this gain fell back last Friday, when shares of the stock declined by 10%. So let’s look at what happened, and if investors should be concerned ahead of earnings.
What happened
The drop in Nvidia stock actually didn’t come from anything Nvidia stock reported. Instead, the likely culprit comes from its smaller competitor, Super Micro Computer (NASDAQ:SMCI). More specifically, the company reported that it would be reporting its results on April 30, but gave no clue as to what those results might be.
Now semiconductor stocks continue to be battered, though Nvidia stock did see some improvements earlier in the week. This was’t the case for SMC stock, which continued to fall after the announcement last week.
The big issue is the no clear guidance regarding results. And while that might not be strange for other companies, it certainly was for SMC stock. The company has released preliminary results with the announcements of quarterly reporting dates 7 in the last 10 quarters.
What investors should watch
As mentioned, shares climbed back up for Nvidia stock. That being said, those shares didn’t return to the highs we saw last Friday. Nor have they edged towards that US$1,000 in share price territory we saw earlier in the year.
Therefore, it seems as though investors remain a bit skittish about semiconductor stocks, including Nvidia stock ahead of earnings in May. But Nvidia stock did give some guidance on what investors could look for in the coming year.
In the fourth quarter, Nvidia stock reported guidance for the first quarter of fiscal 2025. Nvidia stock believes it will achieve revenue of US$24 billion, plus or minus 2%. Further, the company expects generally accepted accounting principles (GAAP) gross margins and non-GAAP gross margins to hit 76.3% and 77%, respectively.
Overall, the company’s outlook remained quite strong. So that’s why investors will need to watch the first quarter carefully to see if results line up. And if more are on the way.
Not quarters, but years
The big item that investors will need to keep looking into is whether Nvidia stock will continue to achieve its set out results. Right now the company is seeing massive expansions in its semiconductor business – much from artificial intelligence, as well as data centres and gaming. Even automotive has had its influence on the stock.
Even so, CEO Jensen Huang believes the next few years will be strong for the company. There continues to be a high demand for these products that simply cannot disappear. That’s because these semiconductors make up any and every digital aspect of our lives.
So if you’re looking for growth, consider a drop in share price for Nvidia stock a good thing. The company might be getting away from its status as a growth stock. But that’s exactly when long-term investors will want to sink their teeth into it.
