It’s difficult to think of another company report that had the potential to have a more profound impact on the global equity market than Nvidia’s results due tomorrow.

Nvidia’s earnings are a direct barometer of the ongoing artificial intelligence boom, and its prominent position in the S&P 500 in terms of market cap means any volatility in NVDA shares tomorrow could send waves through global stocks.

After a 162% rally in 2024, Nvidia single-handedly has the potential to send global equities into the stratosphere tomorrow or bring them crashing back down to earth. Over five years, NVDA shares are over 2,900% higher.

Expectations are high going into tomorrow’s earnings results. And they have been for the last couple of quarters.

Nvidia is expected to report EPS of $0.65 and revenue of $28.7 billion, which would represent a 113% increase in revenue compared to the same period a year ago.

Market participants will be mindful that the rally after the flash crash early in August has taken Nvidia and other technology shares back to frothy valuations on an earnings basis.

Markets seem happy with Nvidia trading at 40x, 50x, and even 60x historical earnings, with the promise of higher earnings on the horizon. Investors’ focus tomorrow will almost exclusively be on the outlook and whether forward multiples are justified.

Should tomorrow’s report so much as hint at a slowdown in growth or show momentum is flattening out, it could be a blood bath for Nvidia, US tech, and the broader global equity complex. 

“The focus of this report will be less on the past quarter and more on the outlook, including how Nvidia will address the issues it’s facing,” said Sam North, Market Analyst at investment platform eToro.

The ramifications for other technology shares are huge. Nvidia’s supply chain includes many other global chip makers, and their results will directly affect the health of their peers.

In addition, the demand for chips and the ability to supply them will highlight the world’s appetite for AI and make the billions and billions being invested by the likes of Meta, Tesla, Google, and Microsoft look like a good idea or not. 

The volatility in NVDA shares immediately after earnings releases highlights Nvidia’s role in the world’s adoption of AI.

“Over the past eight quarters, Nvidia shares have closed higher six times. As we approach the upcoming release on Wednesday, options are pricing in a potential move of +/-10%, which aligns closely with the average move of 9% over the last eight quarters,” Sam North explained.

“Historically, Nvidia has averaged a 7.9% move in the week following its earnings report. While this doesn’t guarantee a positive outcome this time around, with shares trading just below their all-time highs, it’s not out of the question to anticipate a new record price if the company surpasses expectations again.”

Helium One shares tanked on Tuesday after the Tanzanian-focused helium explorer announced a placing and fresh update on its Itumbula West projects.

Shortly after Helium One shares touched their highest levels since March last week, the company conducted another placing raising at a 37% discount to the closing price of 1.74p per share on August 23, 2024.

A total of £6.43 million has been raised from a single institutional investor, Cynosure Capital PTY Ltd. Retail investors were not given the opportunity to participate in the round, which sent shares down by over 14%% in early trade on Tuesday.

The funds will be used to finance the acquisition of a 50% stake in the Galactica-Pegasus project located in Colorado.

The net proceeds from this subscription will be allocated to various aspects of the acquisition of Galactica-Pegasus. The largest portion, US$2.7 million, will be dedicated to funding six wells, with a cap of US$450,000 per well.

Additionally, $2.55 million will cover the company’s 50% participating interest share in tie-back, installation, and processing expenditures required for the Galactica Project’s development. The company will also allocate US$1.5 million to reimburse past costs incurred by Blue Star on the Galactica Project. The remaining $1.18 million will be used for associated fees, legal costs, working capital, and development contingencies.

Alongside the announcement of the dilutive share placing, Helium One provided an update on a well test at Itumbula West-1, which yielded interval flows of up to 7.6% helium.

“We are very pleased with these results from the EWT in the faulted Karoo interval. This is a globally unique helium play and it has taken a lot of hard work and collective effort across multiple disciplines to establish how this system works in the southern Rukwa Basin,” said CEO Lorna Blaisse, Chief Executive Officer.

We have gained a huge amount of information from this Karoo EWT and look forward to seeing what the fractured Basement EWT is going to yield. Once we have completed testing on this second interval, we plan to finalise our integrated subsurface modelling and resource estimates to complete our feasibility study.”

On Friday, steady yet slow buying activity was observed in London’s leading index ahead of Fed Chair Powell’s much-anticipated speech at the Jackson Hole Symposium.

The FTSE 100 remained steady as the Fed Chair delivered his speech, proclaiming the ‘time has come for policy to adjust’ confirming the Federal Reserve is about to start cutting interest.

“The Fed finally pivoted away from its role as staunch inflation fighter back to its default position as facilitator of economic growth,” said George Lagarias, chief economist at Forvis Mazars.

“Mr Powell’s remarks on rising unemployment left no question as to the Fed’s intention to cut rates this year.”

The Jackson Hole Symposium is one of the biggest events on the financial calendar because it has the potential to move markets. It doesn’t always live up to expectations, but 2024’s instalment certainly did.

London’s tepid response on Friday was an outlier. The S&P 500 soared over 1% as Powell delivered his speech and was closing in on all-time record highs. US bond yields were sinking, and gold was breaking to fresh highs.

*FED'S POWELL: 'THE TIME HAS COME FOR POLICY TO ADJUST'
*POWELL: WE DON'T SEEK OR WELCOME FURTHER LABOR MARKET COOLING
*POWELL: MY CONFIDENCE HAS GROWN THAT INFLATION IS ON PATH TO 2%

— zerohedge (@zerohedge) August 23, 2024

The FTSE 100 has held its own this week, sticking very close to the 8,300 level. Friday saw the index above this level, but only by a few points.

A stronger pound against the dollar can be blamed for the FTSE 100’s muted response as the inverse relationship with the FTSE 100 sucked the life out of any attempt for UK stocks to follow the US higher.

Dollar weakness weighed on the FTSE 100’s many overseas earners and offset the general optimism around Powell’s speech.

JD Sports continued yesterday’s rally and broke to the highest levels since January with a 2%. Concerns about a guidance downgrade in the early days of 2024 are subsiding after the retailer released reasonably strong sales growth figures yesterday. JD Sport’s strong growth in North America will have helped the stock higher on Friday, with borrowing costs set to fall.

Melrose was the FTSE 100’s top faller after UBS analysts took an axe to their price target, cutting it from 770p to 400p. Melrose shares were down 8% at the time of writing.