Time is ticking away, as the semiconductor juggernaut Nvidia (NASDAQ:NVDA) still has around 28 hours until reporting earnings for its fiscal second quarter of 2023. A rise in Nvidia stock price can be seen today even before the news has been released.
As of 12:45 PM ET, Nvidia shares were up 1.3%, having risen as high as 2.5% earlier in the day.
What’s the Story?
This is a surprise, given that Nvidia (NASDAQ:NVDA) has already warned that earnings news won’t be spectacular. You may remember that Nvidia shared an initial earnings report for Q2 roughly two weeks ago.
As a result of a sequential drop in chips sold for video gaming purposes and slower-than-expected sales of server chips for data centers, management cautioned in that report that Q2 revenue would come in closer to $6.7 billion. Similarly, Nvidia’s gross profit margin on revenue will be much lower than what investors were led to expect, coming in at around 43.7% rather than the 65.1% that the company had aimed for.
Nvidia (NASDAQ:NVDA) has taken action to reduce losses, and its operational costs will be marginally lower than expected, but the end outcome will still likely disappoint investors.
What’s Next?
That being said, today’s stock price increase for Nvidia (NASDAQ:NVDA) begs the question: why? That’s an excellent inquiry, and I hunch the reply is as easy as bottom-fishing.
Read the preceding table once more. Nvidia (NASDAQ:NVDA) stock has dropped by 43 percent since the beginning of 2022. The stock price has dropped roughly 10% in the past week alone. Investors may be disappointed by Nvidia’s sales and earnings tomorrow, with some predicting as little as $0.20 per share in earnings, down 79% year over year. However, it only takes a glance at the stock chart to see that the price of Nvidia stock has already factored in a lot of bad news.
It’s possible that the bad news hasn’t been baked in enough. With a P/E of 45 today and analysts still expecting 22.5% long-term profit growth rates for Nvidia (NASDAQ:NVDA) (resulting in a PEG ratio of 2.0), I believe the company is getting closer to a realistic valuation. There is a chance that Nvidia stock may rise following earnings if the company announces anything approximating an earnings “beat” tomorrow and then provides guidance for the rest of the year that isn’t absolutely terrible.
Featured Image : Megapixl © Anborvl
Author Shariq Khan 
