Nvidia’s Q3 Results Expected Amid Supreme Court Case

As earnings season continues, Big Tech stocks may be at the forefront of traders’ minds, with one chip industry superstar leading the pack. Let’s take a look at Nvidia (NVDA) ahead of next week’s expected results release, amid a key Supreme Court case:

Will Nvidia’s Q3 Release Provide a Boost?

On 20 November, Nvidia is expected to release its third-quarter 2024 results, which will be its first earnings call as a member of the Dow Jones Industrial Average (USA 30). Semiconductor stocks like Nvidia have struggled to rise in value recently, even as public interest, according to some, has not waned. Investors may be waiting to see if next Wednesday's report will provide impetus to buck this trend. 

Expectations for Nvidia's earnings are high, with the company projected to report an impressive over 80% year-over-year revenue. This growth is largely driven by Nvidia's continued dominance in the AI chip market, where it holds a commanding market share in data centre applications for Artificial Intelligence training and inference. 

Nvidia’s stock has seen significant momentum in 2024, growing by just under 200% in value due to robust demand for its cutting-edge AI chip lineup, including the highly-anticipated Blackwell GPUs. As investors look to the earnings report, the company’s performance could set the tone for related chip stocks and influence the trajectory of semiconductor market sentiment into the year’s end. If Nvidia meets or exceeds revenue expectations, it could revitalise confidence in the sector and spark renewed investor interest. (Source: MarketWatch)

Any financial projections and assumptions are for illustrative purposes only, and must not be relied upon.

Big Tech’s Court Battle

While experts’ expectations for next week’s earnings release may be rosy, Nvidia, along with Big Tech peer Meta, is facing headwinds from another direction - the U.S. Supreme Court. 

The firm is under significant legal scrutiny as a decision from the Supreme Court is awaited on whether to sustain a class-action lawsuit against it. The legal case centres around accusations that Nvidia misled investors regarding its revenue sources linked to cryptocurrency mining. This trouble stems from a 2018 lawsuit led by a Swedish investment-management company, following a sharp drop in Nvidia’s stock price after the profitability of cryptocurrency waned and revenue projections fell short. This significant decline in the company’s stock sparked investor allegations of misinformation.

This case is one of two high-profile class-action suits currently challenging major tech firms at the Supreme Court. Meta Platforms (META), the parent company of Facebook, is similarly embroiled in a lawsuit tied to the Cambridge Analytica scandal and investor claims about data privacy breaches. The outcome of these cases could have significant implications for future securities litigation surrounding tech companies' accountability to investors.

Nvidia’s defence hinges on the argument that the lawsuit does not meet the criteria set by the Private Securities Litigation Reform Act of 1995, designed to curb baseless legal actions. Previously, a district court had dismissed the complaint, but the decision was overturned by the federal appeals court in San Francisco, allowing the case to proceed. The outgoing Biden administration has voiced its support for the investors, adding weight to the legal battle. A Supreme Court ruling on this pivotal case is anticipated by early summer 2025.

Conclusion

Nvidia seems to have been going from strength to strength in recent years, having been at the forefront of market interest in semiconductor chips. However, some might be wondering if the firm’s major legal issues could cast a shadow over next week’s earnings release. Whether this key tech firm’s winning streak will extend from Wall Street’s trading floors to the highest court in the land remains to be seen.