Nvidia: Still a Market Mover, but Growth Slowing
For years, Nvidia's quarterly earnings have dominated the earnings season. The chipmaking giant has epitomized the AI trade, powering the S&P 500's rise.
However, Nvidia's upcoming report on February 26 may not carry the same weight. The market has broadened, and its contribution to the S&P 500's gains has declined from 20% in 2024 to about 5% this year.
This shift is evident in the S&P 500's top performers. Meta, Nvidia, Walmart, JPMorgan, Amazon, Palantir, and Eli Lilly have been the major contributors this year, unlike 2024 when the "Magnificent Seven" accounted for over half the index's gain.
Nvidia's growth trajectory is also decelerating. Its peak sales growth of 265% in Q4 2024 has slowed to an estimated 73% for this quarter, despite remaining significant.
Even strong earnings may not lead to stock price gains due to concerns about supply constraints. Last quarter, Nvidia shares rose a modest 0.5% after reporting, while the S&P 500 remained relatively stable.
Despite its slowing growth, Nvidia remains a key player in the AI trade and the global tech industry. Fundstrat's Mark Newton believes the company's importance stems from its significance to Big Tech peers like Meta and Amazon.
However, in a broadening market, Nvidia's central role may not be as impactful as it once was. As Julie Hyman of Yahoo Finance notes, "the center doesn't mean what it used to."