[Click eStock] "NVIDIA Q2 Earnings in Focus... IT Stock Turning Point"

NVIDIA Earnings Announcement Scheduled for August 29
Positive Q3 Guidance Could Boost Stock Price
Negative Guidance May Impact the Entire IT Sector Adversely

This week (8/26~30), the IT sector is expected to face a significant turning point. The earnings announcement of NVIDIA, a representative company in the artificial intelligence (AI) industry that led the rise in IT company stock prices in 2024, is scheduled for August 29, Korean time. Whether NVIDIA’s earnings will exceed consensus (market average forecast) and the level of its Q3 guidance are expected to have a major impact on the stock price volatility of the IT sector and related companies.

[Image source=Yonhap News]

Researcher Kangho Park of Daishin Securities stated, "Q2 earnings are expected to slightly exceed consensus in sales and operating profit, but Q3 guidance may meet or fall short of consensus." He added that due to weaker-than-expected demand for IT devices and the increased consensus burden on NVIDIA, a conservative outlook should be maintained for September.

Looking at NVIDIA’s earnings trends over the past five quarters, sales and operating profits have consistently exceeded consensus, but the margin of outperformance has gradually narrowed. Despite ongoing global investment expansion in AI and infrastructure sectors, NVIDIA’s earnings upgrades are unlikely to be substantial due to limitations in SK Hynix’s High Bandwidth Memory (HBM) production capacity and TSMC’s foundry supply increase. Additionally, sluggish sales of Samsung Electronics’ Galaxy S24 and Galaxy Z6 series, as well as weaker-than-expected smartphone replacement demand in China, are estimated. This could negatively affect the expansion of AI investments.

Researcher Park said, "If NVIDIA’s guidance is positive, it could act as a catalyst for stock price increases," adding, "In the 2024 IT sector, stock price rises were driven more by AI investment benefits centered on SK Hynix than by demand improvements in upstream industries." However, weakness in NVIDIA’s stock price would negatively impact the entire IT sector, including AI-related fields. The lowered sales expectations following the Apple iPhone 16 launch at the end of September could also be a burden. Even during the traditional peak season, if demand growth is unclear, repeated inventory adjustments and corporate earnings slowdowns, combined with weakening AI outlooks, could become a short-term cause of stock price weakness.

Conversely, if NVIDIA’s earnings and guidance exceed consensus and provide reassurance, continued AI investments and increased replacement demand for AI-related IT devices are expected after Q4 2024, raising semiconductor growth prospects. NVIDIA’s Q2 2024 earnings and guidance are likely to be key factors determining the short-term direction of the global stock market and IT company stock prices.