AI developers are constantly demanding more power, fueling the AI boom, which bodes well for Nvidia.
Nvidia (NVDA) is becoming more vertically integrated, taking interests in companies that help secure power for data centers, whether from the grid or independent power sources.
It is also reportedly in advanced talks to acquire an interest in Cloverleaf Infrastructure, a company that arranges power for data centers. Nvidia also took an equity interest in SoftBank’s SB Energy, which was a deal tied to a megacampus in Ohio that OpenAI leased for 20 years. Additionally, Nvidia made a $2 billion investment in Lancium, the power developer behind a campus in Abilene, Texas, where OpenAI rents computing capacity from Oracle.
Also Read: Goldman Sachs spots huge twist ahead of Nvidia’s earnings
Nvidia is clearly becoming more vertically integrated in data center development, which should ensure its market dominance for 20+ years, especially since many data centers operate under 20-year leases.
NVIDIA is the earnings finale
Expectations are certainly high heading into NVIDIA’s announcement on August 26. Analysts expect NVIDIA to nearly double its earnings and revenue from a year ago. So, I’ll be paying close attention to what CEO Jensen Huang has to say about AI demand and what he sees coming down the pipeline.
NVIDIA’s results could push S&P 500 earnings growth above 50% for the quarter. That’s simply stunning and shows just how strong this earnings season has been.
Related: Louis Navellier sets eye-opening Nvidia stock price target for rest of this year
My stock grading system rates NVIDIA as a C. That may seem like a low grade given everything I’ve just said. Remember, these rankings are weighted 70% on their quantitative score and 30% on their fundamental score.
On the fundamental side, note the low marks for earnings surprises and earnings momentum.
While the reports are good, NVDA has hit an inflection point where the rate of increase is decreasing.
On the quantitative side, institutional buying pressure has waned. These are shorter-term trends.
Long-term, my forecast is that NVDA will be trading at $500 by the end of the decade.
For more information about my stock grading system, click here.
NVIDIA won’t be the only thing Wall Street is watching
On August 26, we’ll also get the July Personal Consumption Expenditures (PCE) report, which is the Fed’s preferred inflation gauge.
Economists expect headline PCE to rise 0.1% in July and 3.6% over the past 12 months. That would be down slightly from a 3.7% annual pace in June. Core PCE, which excludes food and energy, is expected to rise 0.2% for the month and 3.3% year-over-year.
After the encouraging recent Consumer Price Index and Producer Price Index reports, we want to see inflation continue to behave. Another favorable reading would be good news for stocks, especially with the Fed’s September meeting right around the corner.
And speaking of the Fed, its annual Jackson Hole symposium kicks off August 27.
The big news will be what Fed Chair Kevin Warsh has to say. I’m anticipating that he’ll talk about the productivity gains we’re seeing from artificial intelligence and why those gains are not inflationary. We’ll see.
But with inflation and interest rates still front and center, you can bet Wall Street will be listening closely.
So, between NVIDIA, inflation, and the Fed, there is plenty that could move stocks this week.
Related: Nvidia just sent a huge signal to investors ahead of earnings
