Investors look towards Nvidia earnings
The focus for markets moves away from the latest tariff pause and on to earnings from chip giant Nvidia – can it help keep the rally going?
All eyes on Nvidia
Donald Trump’s latest tariff turnaround has helped markets to start the final week of May in strong form. For now, we can all take trade wars off our radar, at least until the 90-day pauses start to expire.
This leaves us with Nvidia earnings as the main event of the week. For reasons known only to the chip giant’s board, Nvidia prefers not to release earnings along with the rest of Big Tech earlier on in the season, choosing instead to stand alone at the back end of earnings season, just when attention has shifted away from the quarterly round of corporate reports.
But at $3 trillion US dollars and one of the largest weights in the S&P 500, Nvidia cannot be ignored. As such it drags the focus back to earnings one last time before the season ends. And given the tariff turmoil and Trump’s growing Cold War with China, Nvidia sits right at the centre of geopolitics too.
Nvidia shares are a proxy for the broader market. Having slumped into early April, the price has now recovered and is flat on the year. Its record on earnings is impressive, and hasn’t missed forecasts for a whole year. But all eyes will be on the commentary around the figures, and how they see the tariff war playing out.
Sentiment has recovered since the first tariff pause announcement, and has been further supported by the tariff pauses with China and the EU, as yesterday’s consumer confidence reading showed. A strong set of numbers from Nvidia and a more optimistic outlook would do a lot to help investors feel better as May gives way to June.
Earnings season round-up
As the first quarter (Q1) 2025 earnings season nears completion with 96% of S&P 500 companies having reported, 78% delivered positive earnings surprises and 63% beat revenue expectations. The blended year-over-year (YoY) earnings growth rate stands at 12.9%, marking a second consecutive quarter of double-digit growth—up significantly from the 7.1% estimate from 31st March, with nine sectors showing improved results.
Looking ahead to the second quarter (Q2), earnings guidance is mixed, with 47 companies issuing negative outlooks and 40 offering positive ones.
Q1 earnings season’s importance was muted as the actual figures covered the period before tariffs were announced, and outlooks could only provide a broad overview of what might come next. Q2 might well be the real test for investors, and show whether this rebound in stock markets can be sustained.
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