Artificial intelligence (AI) powerhouse Nvidia is set to release its second-quarter earnings report, and experts are divided on how it will impact the already sluggish market. Analysts predict a profit of $2.09 per share and revenue of around $11.2 billion. Nvidia’s stock has been on a winning streak this year, thanks to the growing popularity of AI. The company specializes in producing chips that power generative AI, which is capable of creating new content like text, images, and more. During the first quarter, Nvidia’s earnings and sales exceeded expectations, with CEO Jensen Huang mentioning an increase in supply to meet the surge in demand.
A positive earnings report from Nvidia could potentially lift the entire market, according to Phillip Toews, CEO of Toews Asset Management. Nvidia has become a symbol of the AI trend that has driven stocks into a bull market, despite the US Federal Reserve’s ongoing efforts to combat inflation through interest rate hikes. In fact, Nvidia’s stock has surged an impressive 212% this year, leading the way for other tech giants like Alphabet, Amazon, Apple, Meta, Microsoft, and Tesla.
Tech stocks showed optimism on Monday, with the tech-heavy Nasdaq Composite index experiencing a 1.6% increase, the largest one-day jump of the month. However, there are concerns about how long the tech rally can last. Weak retail earnings and elevated Treasury yields have put pressure on stocks, leading some investors to favor bonds. Despite this, the Nasdaq Composite was the only major index to finish Tuesday in positive territory. Nvidia’s shares have risen by approximately 5% this week, with Tesla, Meta, and Apple also seeing gains.
Experts expect Nvidia to provide a positive outlook, which could further fuel the tech rally for the remainder of the year. However, any weaknesses in Nvidia’s earnings report could have a negative impact on its shares and other tech stocks. It’s not just Nvidia’s quarterly results that pose a risk to the market this week. Federal Reserve Chair Jerome Powell will deliver a speech on Friday at the Kansas City Fed’s economic symposium. Last year, his remarks about the Fed’s commitment to controlling inflation led to a 1,000-point decline in the Dow Jones Industrial Average.
Source: CNN Business’ Before the Bell newsletter (no URL provided)
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Rising US Home Prices Present New Challenge for Buyers
In addition to dealing with mortgage rates above 7%, US homebuyers are now facing rising home prices, putting further strain on the housing market. According to a report from the National Association of Realtors, prices have reversed five months of declines, with the median existing home price reaching $406,700 in July, marking a 1.9% increase compared to the previous year. This is the highest price ever recorded for the month of July. Prices rose in the Northeast, Midwest, and South, while remaining unchanged in the West.
The low inventory of homes for sale is the primary driver behind the price increase. At the end of July, there were only 1.11 million existing homes available to buy, a 14.6% decrease compared to the previous year. This is the lowest number of homes for sale in the month of July, typically a busy time for the housing market. Homeowners are opting to hold onto their properties due to the ultra-low mortgage rates they obtained, which are significantly lower than the current rates.
Source: CNN Business’ Before the Bell newsletter (no URL provided)