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If Nvidia (NVDA), the most important “Magnificent Seven” name, is going to shake off the bears, then it could reignite trade for the whole megacap tech stock complex.
“Nvidia being flat last night was enough to kind of give a shot in the arm to the entire market, which has obviously been down in the last week,” EMJ Capital founder Eric Jackson said on Yahoo Finance’s Opening Bid podcast (see video above or listen below). “But this was sort of like good enough results to kind of make people feel like, hey, maybe we can get back into some momentum names.”
Shares of the $3.2 trillion market cap chipmaker reversed premarket losses and were up nearly 3% in early trading on Thursday as investors digested a host of Nvidia earnings headlines.
In its earnings release on Wednesday evening, Nvidia said it expects gross profit margins of 70.6% to 71% in the first quarter as it contends with the production ramp-up of its new Blackwell chip.
That initially drove concern in the markets about peak AI demand — and perhaps peak Nvidia hype.
Nvidia execs sought to push back on the bears on its earnings call.
“We’re going to have to continue to scale as demand is quite high, and customers are anxious and impatient to get their Blackwell systems,” Nvidia founder and CEO Jensen Huang said. Huang teased several new powerful chips set to be unveiled at the company’s March 17 GTC conference.
Listen: Why you should diversify out of ‘Mag 7’ stocks
CFO Colette Kress added, “Once our Blackwell fully rounds, we can improve our cost and our gross margin. So, we expect to probably be in the mid-70s later this year.”
But another strong quarter from Nvidia was somewhat lost in the intense focus on the outlook.
Quarterly revenue rose 12% sequentially and 78% from the prior year. Data center sales more than doubled from the prior year. Earnings handily beat analyst estimates.
Read more: How does Nvidia make money?
Nvidia’s stock was subsequently defended by the Street. Most analysts reiterated bullish ratings and price targets on the stock.
“We understand the desire to diversify portfolios away from AI/cloud, but we believe this under-appreciates the solid (and global) pace of AI investments and Nvidia’s compelling valuation,” Bank of America chip analyst Vivek Arya wrote in a client note.
Traders also initially defended the Magnificent Seven names, though tech stocks faltered in midday trading on Thursday. Gains for these momentum names haven’t been the norm as of late.
