Nvidia Earnings: Less Market-Moving Power?

Nvidia’s upcoming fourth-quarter earnings release is highly anticipated, but the semiconductor giant’s results may not hold the same market-moving weight they once did. This shift reflects broader market dynamics and the evolving role of Nvidia within the tech landscape.

Several factors contribute to this change. The influence of the “Magnificent Seven,” including Nvidia, on overall market performance has diminished this year compared to last. This is partly due to the underperformance of some of these tech giants and partly because of a broadening market rally, with a wider range of stocks contributing to gains.

Data illustrates this shift. Last year, the Magnificent Seven collectively accounted for over 50% of the S&P 500’s gains, with Nvidia alone contributing a substantial 20%. This year, the picture is different. While Meta remains a leading contributor, Nvidia’s influence has decreased to around 5%. Other sectors, including companies like Walmart, JPMorgan Chase, and Eli Lilly, have emerged as significant market drivers.


This broadening trend is further evidenced by comparing the market-cap weighted and equal-weighted S&P 500 year-to-date performance. The significant gap between these two measures that existed last year has narrowed considerably, indicating a more diversified market rally.

Beyond the broader market context, Nvidia’s own performance has also evolved. While the company experienced explosive revenue growth in 2023, fueled by demand for generative AI chips, that growth is now moderating. Revenue gains, while still impressive, are no longer reaching the triple-digit peaks of the past. The estimated revenue for the upcoming earnings release represents a substantial 73% year-over-year increase, but this is down from the stratospheric growth rates seen previously.

Nvidia’s stock performance reflects this changing narrative. While the stock has seen some gains this year, it has not sustained the record highs reached earlier in January. This suggests that the market’s enthusiasm for Nvidia has tempered somewhat.

Looking ahead, Nvidia’s earnings will still be closely watched, but their impact on the broader market may be less pronounced than in previous quarters. The ongoing broadening of market participation and the normalization of Nvidia’s growth trajectory suggest a shift in the company’s relative importance to overall market sentiment. While Nvidia remains a significant player in the semiconductor industry, its earnings are no longer the singular market-moving event they once were.