Wall Street is on edge ahead of NVIDIA’s earnings report this week. Even companies with business connections to the big AI chip makers are getting caught up in the anxiety. Shares of Cadence Design Systems and Synopsys, which make software used in the chip design process, both fell more than 2% in Monday trading, with CNBC’s Jim Cramer attributing the selloff to NVIDIA’s quarterly earnings release scheduled for Wednesday night. “These are NVIDIA’s partners. It’s another way to take on NVIDIA, so to speak. And now the bet is being made, and the bet is very against NVIDIA,” Cramer said on “Squawk on the Street” on Monday. Cramer’s charitable trust, a portfolio used by CNBC Investing Club, has held NVIDIA shares for years. Meanwhile, NVIDIA also fell about 2% on Monday, on pace for its third decline in the past five sessions. Nvidia’s looming earnings report is once again being touted as a make-or-break moment for the artificial intelligence trade, which has been a key tailwind driving a powerful part of the stock market for nearly two years. As a major seller of chips used to develop AI applications, Nvidia has become a poster child for this investment theme. The company’s sales and profits have soared since the beginning of last year, so has its market capitalization and investor sentiment. After more than tripling in 2023, Nvidia’s stock price has risen more than 150% so far in 2024. The company is now one of three companies with a market capitalization of more than $3 trillion, along with Investing Club holdings Apple and Microsoft. Investor expectations for Nvidia seem to grow ever higher every time the Santa Clara, California-based company reports quarterly earnings, but that doesn’t have to be the case, Cramer argued Monday. “Can we afford to write Nvidia off?” Cramer asked rhetorically, referring to the central theme of his Sunday column for Investing Club subscribers. Cramer argues that quarterly hype can obscure NVIDIA’s long-term opportunity. He believes NVIDIA’s long-term opportunity is bright because AI adoption is in its early stages and the company’s software business is undervalued. “I believe NVIDIA should be held, not traded,” Cramer said on CNBC on Monday, noting that he has been a long-time fan of the company. In 2017, when the stock was trading at just under $4 per share, adjusted for stock splits, Cramer gave his dog Everest the surname “NVIDIA.” Cadence Design Systems and Synopsys are two of the best-known names in semiconductor design, working with companies across industries. But as NVIDIA’s influence grows, so too are its relationships with the company. At NVIDIA’s highly anticipated GTC conference in March, Cadence announced an expansion of its multi-year collaboration with the company. Synopsys also revealed new details about its work with Nvidia at GTC.
These two stocks show investors are worried about Nvidia’s earnings.
By NvidiaDaily
