Markets

Ken’s features in the media recently, discussing Nvidia’s upcoming earnings report:

• Mahoney added that investors are going to brace themselves, citing the post-earnings selloff in equities despite strong results.
• He said that even if Nvidia’s Q4 results beat Wall Street expectations, investors will still ask what’s next for the company.
• Analysts at Aletheia Capital upgraded NVDA stock to ‘Buy’ from ‘Hold’ on Monday, saying that the company, along with TPU firms, is expected to capture a lion’s share of the $530 billion in compute capital expenditures.

Nvidia Corp.’s (NVDA) fourth-quarter (Q4) earnings are due out on Wednesday, and ahead of the results, Ken Mahoney, president and CEO of Mahoney Asset Management, said that investors need reassurance about the AI trade’s prospects.

During an interview with Schwab Network, Mahoney pointed to tech stocks like Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN) struggling after reporting their latest quarterly results.

“They’re the epicenter of AI; maybe they can kinda fill us in [as to] what’s happening,” Mahoney said, referring to Nvidia.

What Nvidia Needs To Deliver This Quarter

Wall Street is expecting Nvidia to report earnings per share (EPS) of $1.53 in Q4, soaring by 80% year-over-year compared to $0.8 during the same period a year ago, according to Stocktwits data. The AI giant is expected to report revenue of $65.97 billion, up from $39.33 billion in the year-ago period, growing by about 68% YoY.

“It’s not about beating and guiding higher — I think all those companies did that, all Mag 7 did that, I think, except for Tesla — it’s the reaction to it,” Mahoney said, referring to the muted market reaction to Mag 7 stocks post-earnings.

“Even if Nvidia blows out the numbers, investors are still saying and thinking, ‘Okay, what’s going to happen next?” he said, noting that even Palantir Technologies Inc. (PLTR) lost its post-earnings gains in a few sessions.

Mahoney added that investors are going to brace themselves, citing the post-earnings selloff in equities despite strong results.

“They (Nvidia) really need to blow it out as far as the topline [is concerned]. They really need to blow it out as far as the net [profit is concerned]. And they kind of need to come around and let us feel reassured that the AI trade is still in its early innings,” he said.

Stocks ended a choppy four-session run in the green, with tech-led momentum earlier in the week prevailing over news of a slowing economy, sticky inflation, and geopolitical tensions. The Standard & Poor’s 500 Index advanced 1.07 percent, while the Nasdaq Composite Index rallied 1.51 percent. The Dow Jones Industrial Average inched up 0.25 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, rose 0.75 percent.¹²

Focus on Tech

Stocks kicked off the shortened trading week with a yawn as continuing investor angst over AI disruption in the software industry kept gains modest.³ But tech-led market momentum picked up—including gains from lesser-known names—as investors digested minutes from the Fed’s January meeting.⁴ Stocks then came under pressure as investors fretted over geopolitical tensions in the Middle East and concerns about private credit in the financial sector.⁵ Markets rallied on Friday after the Supreme Court struck down the White House tariffs. The news overshadowed a sticky inflation report and a disappointing update on Q4 gross domestic product (GDP), which was hurt by federal spending during the government shutdown.⁶ All week, the markets were eyeing the Friday economic updates and were a bit surprised at the timing of the tariff news.

GDP rose 1.4 percent in Q4, lower than the 2.5 percent expected and slower than the 4.4 percent pace in Q3. The slowdown reflected declines in federal and consumer spending.⁷ While the Supreme Court’s ruling on tariffs had been expected, the news still took investors by surprise when it arrived on Friday. The decision was widely expected, but the timing of the news was uncertain. Investors appeared to welcome the news, as companies may have greater pricing flexibility without tariffs.