By Alex Financials

Anticipation Builds for Nvidia (NVDA) Earnings

US stocks remained relatively flat on Tuesday as investors awaited Nvidia’s (NVDA) highly anticipated earnings report, which is expected to be released after the bell on Wednesday. Nvidia, a major player in AI chip technology, saw its stock price gain on Monday, contributing to a record high for the tech-heavy Nasdaq Composite (^IXIC). On Tuesday, the Nasdaq hovered around the flatline, while the S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) each rose by approximately 0.2%.

Retail Earnings in Focus

As investors gear up for Nvidia’s results, attention is also on the retail sector, with several key companies reporting their quarterly earnings. Lowe’s (LOW) reported a smaller-than-expected decline in sales, thanks to continued spending on minor repairs by cash-strapped consumers. Despite this, the company issued a cautious outlook for the current quarter, causing its shares to dip around 3%.

Macy’s (M) beat earnings expectations, although its revenue was down 2.7% compared to last year. The department store chain’s same-store sales fell less than anticipated, signaling some traction in its new strategy. Urban Outfitters (URBN) and AutoZone (AZO) are also slated to release their earnings, providing further insight into consumer spending and economic health.

Federal Reserve Speeches and Economic Indicators

Investors are also paying close attention to speeches from Federal Reserve officials amid a scarcity of economic releases. On Tuesday, Fed Governor Chris Waller reiterated the need for several more months of favorable inflation data before considering rate cuts, aligning with the central bank’s recent higher-for-longer policy stance. The minutes from the Fed’s May meeting, set to be released on Wednesday, will provide additional clarity on the rate-cut debate.

Comcast (CMCSA) Introduces StreamSaver Bundle

In the media sector, Comcast (CMCSA) unveiled its new StreamSaver bundle, which packages Peacock’s ad-supported premium tier with Netflix’s (NFLX) basic ad tier and Apple TV+ (AAPL) for $15 a month. This bundle, launching next week, offers a 35% saving for Comcast’s broadband internet and TV subscribers. Comcast’s CEO David Watson highlighted the consumer benefits and future bundling opportunities during a JPMorgan investor conference.

The announcement comes as media companies face pressure to scale their streaming services and achieve profitability amid fierce competition from tech giants like Amazon (AMZN) and Google’s YouTube (GOOGL, GOOG). Other industry players, such as Warner Bros. Discovery and Disney, are also exploring new bundling strategies to enhance their streaming offerings.

Mixed Opening for US Stocks

US stocks opened mixed on Tuesday, reflecting investor caution as they await Nvidia’s earnings. The S&P 500 (^GSPC) edged down by about 0.1%, while the Dow Jones Industrial Average (^DJI) remained near the flatline. The Nasdaq Composite (^IXIC) slipped about 0.4%, despite its record high finish on Monday.

2/8/24

Nvidia’s Valuation and Market Expectations

Nvidia’s stock is in the spotlight, with analysts suggesting that the AI chipmaker might be undervalued despite its high price-to-earnings (P/E) ratio. According to EvercoreISI, Nvidia’s relative P/E ratio is at the lower end of its 10-year range, indicating potential for near-term upside if the company delivers strong earnings. Nvidia’s dominance in the AI chip market, as illustrated by a Goldman Sachs chart, further bolsters investor confidence ahead of its earnings report.

In summary, the steady performance of US stocks on Tuesday underscores the market’s anticipation of Nvidia’s earnings and the mixed signals from retail earnings and Federal Reserve comments. As these factors unfold, investors will be closely monitoring their impact on the broader market trajectory.