Overnight – Near-term fortunes of AI rest on tonight’s looming Nvidia results

The Dow closed at a fresh record high Tuesday, despite cautious sentiment as investors awaited results from chipmaking giant Nvidia due tonight

NVIDIA’s quarterly earnings due Wednesday after the closing bell is expected to serve as a gauge on whether the AI-fueled tech rally has room to go or may soon run of steam. Ahead of the chipmaker’s results, Truist Securities said in a recent note, citing regular dialog with component buyers and sellers, that Nvidia’s “business trends continuing to improve.”

Beyond chips, Apple closed above the flatline as gains were limited by announcement late Monday that Luca Maestri will step down as chief financial officer from the beginning of the 2025.

The countdown to Apple’s product event due Sept. 9, meanwhile, continues to dominate investor attention amid expectations from some tech bulls that the tech giant’s upcoming new iPhone could spark an historical upgrade cycle. 

US consumer confidence hit a six-month high in August as fears about a recession subsided, the Conference Board reported Tuesday.  The data undermines the call for 50bps cuts in September and we are looking for the Fed to cut rates by 25 basis points in September, or not at all. The data came ahead of jobless claims and another reading on Q2 GDP data due Thursday and Personal Consumption Expenditures price index, the Federal Reserve’s preferred inflation yardstick, due Friday. 

Nvidia Earnings, expect volatility

Traders in the U.S. equity options market are expecting Nvidia’s upcoming earnings report to spark a more than $300 billion swing in the shares of the world’s most dominant artificial intelligence chipmaker.

Options pricing shows that traders anticipate a move of around 9.8% in the company’s shares on Thursday, a day after it reports earnings, data from analytics firm ORATS showed. That’s larger than the expected move ahead of any Nvidia report over the last three years and well above the stock’s average post-earnings move of 8.1% over that same period, according to ORATS.

Given Nvidia’s market capitalization of about $3.11 trillion, a 9.8% swing in the shares would translate to about $305 billion, likely the largest expected earnings move for any company in history, analysts said.