Weekly equities forecast: Nvidia & Salesforce

Nvidia Q2 earnings preview

Nvidia will release its Q2 earnings on Wednesday, August 28, after the market close.

As has been the case for a while now, the company's earnings will be closely watched by the market. They could impact not only its share price but also broader market sentiment. This is particularly the case given that the stock has been responsible for helping push the NASDAQ 100 and the S&P 500 to record highs.

Expectations are for revenue to rise to $28.54 billion, marking growth of around 211% year on year. EPS is expected to be $0.6, an annual rise of 136%

Nvidia, the AI darling of Wall Street, has been boosted by strong demand for specialized GPUs used for data centre adoption of AI and machine learning. Customers such as Amazon, Microsoft, and Alphabet use Nvidia chips, which account for around 40% of customer revenue.

Earnings come as the share price trades up 160% year to date and investors will want to see fundamentals that support the valuation.

What to watch:

Revenue guidance for the current quarter is expected to be 74%, with growth of 57% in the following quarter. These are still strong numbers, particularly given that they're coming from a higher base.

NVIDIA is expected to provide more details about the upcoming Blackwell GPU, whose shipments have already been delayed. Let’s not forget, though, that CEO Huang expressed optimism that Nvidia would see a lot of Blackwell revenue this year. Evercore analysts said that they considered the worries surrounding the Blackwell delay and supply chain constraints overdone.

Despite those concerns, Wall Street remains bullish, with 66 buy ratings, 8 hold, and 0 sell ratings.

Looking at the chart, Nvidia trades off its all-time high, and with the Nasdaq 1000 overlay, it's easy to see the influence that Nvidia exerts on the broader US Nasdaq 100. The correlation sits just below 0.8. Strong Nvidia results could help extend Nasdaq 100 gains to 20k and beyond. Any signs of weakness could pull the Nasdaq 100 lower as well.

Salesforce Q2 earnings

Salesforce is due to release Q2 earnings on August 28^th.

Salesforce has benefited from a solid demand environment as customers undergo digital transformation and as a customer relationship management software provider that introduces more products that are aligned with customers' needs.

The growing demand for generative AI-enabled cloud-based solutions is also expected to help Salesforce's top-line growth in Q2 as it incorporates more generative AI tools across its product line.

Meanwhile, the acquisitions of Spiff and Airkit.AI, along with subscription growth across its cloud service offering, are also likely to have underpinned growth.

However, there are some areas of risk. A decline in spending by small and medium-sized businesses amid macroeconomic uncertainty, as well as stiff competition from the likes of Oracle and Microsoft, and forex headwinds are considered concerns.

Slowing sales growth remains a concern. The firm, which was experiencing double-digit revenue growth, is now experiencing low double-digit growth, which could slow further.

Furthermore,  Salesforces strategy has shifted from aggressive expansion to focusing on margins. This has led to cost-cutting measures, layoffs, and reduced investment in areas such as sales and marketing.

On the chart, Salesforce has recovered from the May 31st low. However, it is struggling to push above the 200 SMA at 266. A rise above her is needed for the price to extend gains.