US software firm Nvidia is expected to report fiscal second quarter revenue of $11.1bn (£8.78bn), up 65% year-on-year, towards the upper end of its estimated range, when it reports its latest results later on Wednesday.
The tech company, which makes graphics processing units (GPUs), had its stock boosted again this week after HSBC analysts lifted their price target for the company’s stock from $600 to $780 on an increasing sales forecast for fiscal 2024.
It also comes after Morgan Stanley analysts recently said that Nvidia’s stock is the firm’s top pick following its most recent earnings report.
The company, which is now valued at over $1tn, has seen its shares surge nearly 200% so far this year.
Victoria Scholar, head of investment at Interactive Investor, said: “Nvidia has become a proxy play for the artificial intelligence boom and the explosion of ChatGPT with investors buying up the stock in an attempt to cash in on the AI revolution.
“The stock has helped power gains for the broader US stock market this year, with the rally driven mainly by a handful of tech stocks including Nvidia, which have been rebounding after the 2022 ‘tech wreck’.”
For value investors, this stock could pose problems due to its lofty valuation and big stock price surge so far this year, according to Scholar.
“It trades on a more than 235 price-to-earnings ratio, which is extremely high. Plus there are concerns about further monetary tightening from the Fed that could dampen demand for growth stocks in the second half.”
Meanwhile, options markets are pricing in a major move from Nvidia's share price in either direction in response to its latest earnings.
Shares in UK online grocer Ocado Retail were 2% higher on Wednesday after the company reduced its prices.
“The joint venture with M&S (MKS.L) is lowering prices by an average of 8%. It comes after the grocer reduced prices in June while other supermarkets such as Tesco (TSCO.L) have also done the same,” Scholar said.
The move is a bid by Ocado to boost demand as battles competition and as consumers grapple with the cost of living crisis.
While food price pressures have been easing, they remain sharply above the headline rate of inflation, potentially prolonging the problematic inflationary backdrop in the UK.
“Issues with supply particularly from India and Ukraine are headwinds to watch and could limit the extent to which supermarkets can lower consumer prices further,” Scholar added.
In July, Ocado maintained its guidance to achieve "marginally positive" EBITDA over the full-year.
GSK plc (GSK.L)
Shares in London-headquartered pharmaceutical firm GSK were nearly 2% higher on Wednesday after the group reported positive news on its shingles vaccine.
GSK said the first trial of its Shingrix (RZV) vaccine, carried out in China, highlighted its success in preventing shingles, or herpes zoster, in adults aged 50 and older.
The trial included almost 6,000 participants randomly assigned in equal numbers to “the RZV or placebo group”.
GSK said no cases of shingles were reported among the participants who received RZV, compared to 31 cases in the placebo arm. The company said the new data adds to the growing body of evidence affirming the efficacy and safety profile of RZV.
Results from the trial will be submitted for publication in a peer-reviewed scientific journal later this year.
Shares in BP were 0.56% lower on Wednesday at 475.05p with its stock now down 15.44% over six months.
Its second quarter profits plunged 78% from $8bn in Q1 to $1.79bn. Moreover, the energy firm has a net debt of $23.7bn, up 11.4% on a year ago, which is also likely to be weighing on its price.
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Moreover, there are questions as to whether the company’s chief executive Bernard Looney is invested in BP becoming a lower-carbon company after saying in an interview that his focus was on creating value for BP’s shareholders
Recession fears leading to demand destruction is also likely to be weighing on BP’s share price as oil prices ease.