Must read: Nvidia, Prudential

NVIDIA 

NVIDIA Corp (NASDAQ:NVDA) gets set to release its second-quarter results after the bell on Wednesday 27 August as the final US tech giant to report this season. 

There’s a lot of focus on this earnings report given that it comes off the back of a shaky period for tech stocks. The AI darlings like Nvidia, Palantir and Meta have suffered some selling pressure this week as investors start to question whether the winning streak is running out of steam. 

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Sam Altman, CEO of OpenAI, suggested a bubble could be forming in AI stocks and a report from MIT said 95% of organisations are getting zero return on generative AI investments. However, this comes after a strong bull run off the April lows for Nvidia which rebounded to become the first public company to achieve a market cap of $4 trillion in July. 

Most analysts are optimistic going into these results – HSBC, Morgan Stanley, Wedbush, and UBS raised their price targets on the stock lately. With AI front and centre for investors this year, powering market gains, many analysts have high hopes that this report will reveal a beat at both the top and bottom line. But with such lofty expectations comes the risk that any small sign of disappointment could heavily punish the stock price. 

According to Refinitiv, Nvidia is expected to report Q2 earnings per share of $1 on revenues of $46 billion, up from 96 cents and $44.06 billion respectively in the previous quarter. 

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There will be a lot riding on guidance for the rest of the year with investors looking for reassurances that Nvidia can continue to deliver growth. China will be another focal point following the resumption of its AI chip sales there after Nvidia agreed to pay the US government 15% of Chinese revenues. Last quarter, Nvidia said it lost out on $2.5 billion because of China export restrictions. Investors will also be paying close attention to its Blackwell business which made up 70% of Nvidia’s data centre sales last quarter.

PRUDENTIAL 

Prudential (LSE:PRU) reports half-year numbers before the market opens on Wednesday. Up until now its new strategy and fresh purpose have been extremely encouraging, with shares rising by more than 50% so far this year, recouping most of the decline suffered over the last three years.

Now focused on Asia and Africa, the group is fully aware that such major continents bring significant opportunities. The combined populations of the two continents is around four billion, with the addressable market worth an estimated $1 trillion of additional annual gross written premiums by 2033. Given the recent weakness of consumer confidence in the region, it will be interesting to see whether, if customers are reluctant to spend, they have been saving instead.

The group’s stated aims by 2027 are punchy, including new business profit growth of between 15% and 20% annually, but even at this early stage Prudential is confident in achieving these goals. 

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Elsewhere, the focus on digital distribution and the move towards more technology-based solutions continues apace, such as the increasing use of advanced analytics and AI for higher value purposes, which is being selectively trialled.

Less positively, and from a broader perspective, heightened geopolitical tensions between the West and China cannot be overlooked, with Hong Kong the group’s biggest single country of profit generation during 2024 at $1.1 billion.