Nvidia stock up over 237% YTD ahead of Q3 report

Shares of Nvidia (NVDA) are up a staggering 237% year-to-date ahead of its third-quarter earnings release. The chipmaker is an investor favorite this year: it's a member of the Magnificent Seven and a leader in the AI-fueled rally. Yahoo Finance Anchors Seana Smith and Brad Smith break down Nvidia's recent market performance and look ahead to third-quarter results.

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Video transcript

SEANA SMITH: All right. Well, it is a big week for Nvidia as well as the company gets set to report third quarter earnings after the bell tomorrow. The chipmaker's blockbuster earnings report back in May sent a ripple effect through the market as investors bet big on the future of AI. Nvidia shares are up over 200% so far this year. We're looking at gains of nearly 240% since the start of the year.

So certainly a lot riding on this report, obviously, for NVIDIA here, Brad, clearly for the chip sector at large. But you can also make the argument for the entire stock market and we just mentioned the performance that we saw in shares following the results that we got back in May. In August, they also reported blowout numbers, yet we saw the opposite reaction in shares. So we saw a surge in May and June. We saw a plunge in August and September.

We also saw that follow through ripple through throughout the broader market here. And there was an interesting note out this morning from Evercore's Julian Emanuel talking about this report saying that the S&P is likely going to have a material move on the back of Nvidia's results. Whether or not that fortifies the year-end rally that we have been talking about maybe anticipating here between now and year end, that remains to be seen are still up for debate.

So lots of important points to point out just in terms of how important this result is going to be for the broader market. And then also just getting a better read on the chip market right now, where things stand, especially on the heels of the restrictions, the US curbs on AI chip exports to China, how big of an impact that's going to have on Nvidia, specifically their data center business, but also what it could mean for the broader market here.

BRAD SMITH: Yeah. It's the artificial intelligence mentions and it's the data center business. Everything else, you can perhaps just listen in. That will be some fodder for side conversation. But at the end of the day, you think about where they're guiding for that January 2024 quarter, that's what investors are going to be looking at to see whether or not the biggest wave of the demand cycle for some of the AI chips as well as some of the data center demand, whether that is behind us or whether that is normalization and steadying that we're seeing at this point as well.

And then additionally, China, because when we think about the GPU orders that they've also seen come from China and how some of that, from the Street's perspective at least, has been front-loaded, any kind of slowdown there on that order front could also impact the trajectory for the price action that we see in shares as well.

Because that's where investors will start to really price in exactly where Nvidia still sees some of the international demand coming from, especially because here at home, there have been such restrictive curbs that have been put in place, especially on the intellectual property design front for these chips too.