Reporting quarterly results for Nvidia Corp. has become a ritual that always ends with huge profits for the company, which makes chips.
But when it plays again on Wednesday, the company, which is at the center of the AI craze, will face more questions about how its long-term goals might affect short-term demand as it gets ready for a big rollout of new chips.
At the same time, executives are talking about inflation less and less on earnings calls, a FactSet analysis released on Friday showed. However, we’ll likely hear more about its long-lasting effects this week, either directly or indirectly, as stores like Macy’s, Target Corp., and Ross Stores Inc. report their quarterly results.
A lot of attention is being paid to Nvidia’s new Blackwell chips, which will help power large language models and start shipping this year.
BofA analyst Vivek Arya wrote in a research note on Thursday that Nvidia shares could be “volatile” in the coming days because of a possible drop in demand as people wait for the new chips to come out. What the company does might depend on China more in the second half of the year, he said. China’s economy has been slowly getting better, and the US has fought to keep it from getting access to more advanced microchips.
“Synovus analyst Dan Morgan said in a report that the biggest question mark over NVDA stock is whether sales growth will slow down later this year before the shipment of the new Blackwell chips, which is set to happen in mid-December.”
“This lag and difficult comparisons cast some shadows over the current lofty valuation.”
This week in earnings
Beyond Nvidia and the big retailers, Zoom Video Communications ZM, +0.31%, Autozone Inc. AZO, +0.57%, Lions Gate Entertainment Corp. LGF.A, +1.33%, Workday Inc. WDAY, +0.53% and Snowflake Inc. SNOW, -1.93% report results.
The appointments you need to make
Retailers and the state of the consumer: Walmart Inc. continues to be the rare retailer to give Wall Street the quarterly profit and sales that it wants, as higher prices keep forcing shoppers to seek out cheaper options for essentials. The big-box retailer also said it had taken control of a bigger swath of the retail market overall, helped by increasing interest from upper-income customers, who like its lower prices as well as the convenience of its delivery services.
“We are not just a play for value anymore,” Chief Financial Officer John Rainey said on Walmart’s earnings call.
This week, we’ll hear from Walmart’s WMT, +1.00% smaller and more vulnerable rivals. Analyst expectations, broadly, are still low.
Target TGT, -0.32%, one of Walmart’s main rivals, reports on Wednesday, as it tries to compete with Walmart on price, in part via its own lines of basics and kitchenware. But the company sells more of what people haven’t wanted over the past two years — that is, clothing, electronics, home goods and other things that, unlike food, shoppers don’t necessarily have to buy. BofA analysts expect a possible sales increase for Target later this year, as it laps the hit it took last year over due to conservative anger over its Pride-themed merchandise.
Macy’s M, -0.66%, which reports a day earlier, will issue the results in the wake of layoffs and plans to close dozens of stores in an effort to modernize. Discounters like TJX Cos. TJX, +1.38% and Ross Stores ROST, -1.50% are also set to report, as inflation hits lower and middle-income shoppers harder. Elsewhere during the week, earnings are also due from Urban Outfitters URBN, -0.94%.
The results will follow lackluster U.S. retail sales overall last month. UBS analysts expect thousands of store closures in the years ahead, amid growing competition from the likes of Temu and Shein.
“Fitch expects the Q1 retail reporting season to be characterized by generally tepid revenue performance, although operating margins across the group could benefit from decelerating cost inflation and sharper inventory and expense planning,” David Silverman, a senior director at the firm, said in emailed commentary.
“We also expect continued retrenchment from weaker players, particularly in competitive categories like apparel, similar to recent wide-scale closure announcements from names like Macy’s, Rue21, and Ted Baker,” he added.
The number to pay attention to
Palo Alto Networks and the demand for cybersecurity: On Monday, cybersecurity company Palo Alto Networks PANW, +0.34% will release its quarterly results. As cyber threats get smarter, the company just announced a big partnership with IBM IBM, +0.04% that will focus on AI. But its outlook in February made some analysts worry about what they called IT customers’ “fatigue” with spending on cybersecurity.
See Also: It seems like Nvidia can’t keep up with demand, but these are the main questions
