This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.
The current stock market rally has three principal legs to stand on: a belief in "immaculate disinflation," robust macroeconomic growth, and NVIDIA's AI-driven gains. Yet, if Citi's projections pan out, one of these legs is about to give way, at least momentarily.
NVIDIA is slated to announce its latest quarterly earnings on the 22nd of May, 2024. While the past few earnings disclosures have seen NVIDIA's stock post outsized gains on the back of fierce AI-related tailwinds, the upcoming event might prove to be a deviation from this bullish pattern.
To wit, Citi has now published its views on NVIDIA's upcoming earnings, expecting the GPU maker to report total revenue of $24 billion vs. buy-side expectations of $26 billion, and $21 billion in sales for the AI-critical data center segment against buy-side expectations of around $23 billion.
Critically, Citi expects NVIDIA to guide to $27.5 billion in total sales for the July quarter, which falls far short of buy-side expectations of around $28 billion but does manage to exceed Wall Street's consensus expectations of $26.5 billion.
According to Citi analysts, investors will pay particular attention to NVIDIA's production ramp-up of the GB200 and B200 chips and their impact on the company's margins, a potential "air pocket" in AI demand in the latter half of 2024, the China factor, and potential electricity consumption constraints while modeling unbridled AI growth.
Overall, as per the view of Citi analysts, NVIDIA's upcoming earnings are looking decidedly less frothy:
"We expect smaller beats versus the prior few quarters on larger numbers, shorter H100 lead times, and gross margin normalization before GB200 volume ramps in 1H25."
Even the much more bullish Bank of America (BofA) analysts expect NVIDIA to encounter "near-term challenges," including potential deceleration in sequential sales growth and China-related sales restrictions. Still, BofA analysts expect NVIDIA's top-line metric to exceed expectations by around 6 percent.
Meanwhile, in another ominous development, the head of the Duquesne Family Office, Stanley Druckenmiller, has pared his stake in NVIDIA by 71 percent, as per the latest Form 13-F filings. Interestingly, Druckenmiller has made a significant pivot toward the iShares Russell 2000 ETF (IWM), which suggests that he is positioning for a growth-to-value rotation. Of course, as always, do note that the Form 13-F data's utility is limited by its lagging nature.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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