- Nvidia shares rose 3.5% ahead of its Q3 earnings announcement on Wall Street
- The Nasdaq Composite gained 1.5% and the S&P 500 increased by 1% during early trading
- Analysts forecast over 50% growth in Nvidia's net income and revenue for fiscal Q3
Nvidia Corp. share price traded 3.5% higher during early trading hours on Wall Street on Wednesday, hours before the world's most valuable company declares its third quarter results. The market cap stands at $4.4 trillion.
The tech-heavy Nasdaq Composite rose 1.5% and the US benchmark S&P 500 gained 1%.
Analysts expect the company to show more than 50% growth in both net income and revenue in its fiscal third quarter.
Nvidia shares have plunged more than 12% since hitting a peak four weeks ago amid concerns over a bubble in artificial intelligence counter. Despite the recent selloff, the stock is up 35% this year, more than twice the almost 17% return of the Nasdaq 100 Index.
The recent dip has made the company's valuation relatively attractive. Nvidia trades at about 29 times forward earnings, far below its 10-year average of 35 and a slight premium to the Nasdaq 100's multiple of roughly 26, as per Bloomberg.
Read Nvidia Q3 estimates below:
'AI Bubble' Concerns
Investors expecting strong Nvidia Q3 earnings and encouraging outlook may find respite amid AI valuation frenzy, the circular nature of financing on AI deals and the vast sums being spent on AI infrastructure without much earnings impact.
The fears about an 'AI bubble' have rattled US and Asian tech stocks and equities in general, sending the S&P 500 to its worst four-day stretch since April.
However, regardless of the anxiety surrounding the AI bubble, demand for Nvidia's chips remains strong among cloud giants, with the likes of Microsoft Corp. making billions of dollar of investment in AI data centers.
Analysts see Nvidia's booming sales slowing in the coming years. The company is expected to post a nearly 60% increase in revenue in its 2026 fiscal year, which ends in January, followed by 41% in fiscal 2027 and 22% in fiscal 2028, as per Bloomberg.
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