Nvidia’s earnings come after months of consolidation in a stock, something investors have had to get used to after the long rally of 2023-2025. But it has remained aloof from the broader selloff.
Q3’s numbers set a high bar, but with Q4 expectations strong we could see further confirmation that the business is still firing on all cylinders. As ever the catalyst will be the guidance for Q1, with a strong lead here providing at least support for the share price, even if not outright breakout.
Consolidation has meant that we are now looking at Nvidia on a much less demanding valuation of about 26 times forward earnings. The stock wouldn’t be immune in a broader selloff, but it has been able to stand aside from the caravan of carnage that seems to afflict a new sector each week. Since it makes the chips that power the AI revolution, it has something of a moat to protect itself from the panics that have affected everything from software to logistics.
The last sustained consolidation in the shares was 2023 – then it lead to a huge breakout which seems unlikely to repeat itself this time, but a gentler, if still sustained, rally still seems more likely than some kind of apocalyptic reckoning, given the steady rise in earnings.
By Chris Beauchamp, Chief Market Analyst at IG
