Nvidia shares are headed for their worst day since 2022, the biggest loss in market value on record

Nvidia Corp. is about to report another set of blowout results on Wednesday, but Wall Street is expecting more and more from the chip giant.

Perhaps this is the reason behind Nvidia shares

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It was sliding toward its worst day in more than a year before the report came out. Shares were down 6.2% Tuesday afternoon and are on track to post their biggest single-day drop since Dec. 27, 2022, when they lost 7.1%.

Nvidia was on track to lose $112 billion in market cap that day, which would represent its largest daily loss of market cap in its history, according to Dow Jones Market Data — with the decline double the $56 billion drop seen on May 31, 2023.

The one-day decline was also on track to be more than the entire market values ​​of other large chip companies, including Micron Technology Inc.

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($88 billion) and Analog Devices Inc.

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($93 billion).

More from MarketWatch: As Nvidia prepares to publish results, these three European chip names are headed toward gains, JPMorgan says

“Given the rise in Nvidia's share price year-to-date…we believe overall market expectations have risen significantly with consensus earnings now approaching our expectations,” HSBC analyst Frank Lee wrote. Nvidia stock is up more than 35% so far this year.

Lee and his team see little room for more earnings in 2024 compared to the sales and earnings surprise seen in 2023.

Analysts tracked by FactSet expect Nvidia to report $4.59 per share in adjusted earnings on $20.4 billion in revenue for its fiscal fourth quarter that ended in January. Adjusted earnings per share are expected to rise more than 400%, while revenues could more than triple.

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The company is expected to see similarly impressive numbers in the current quarter, with analysts forecasting $5.02 per share in adjusted EPS, an increase of more than 350%, and revenue of $22.2 billion, nearly triple what was seen in the previous year.

Nvidia's setup looks “challenging” as the bar is “very high,” according to Mizuho desk analyst Jordan Klein. “The stock's potential move to the downside looks much larger than the move to the upside,” he continued, though he also said he was not making a decision this quarter, because it would likely be a “mistake to do so” with Nvidia.

Harsh Kumar, an analyst at Piper Sandler, noted that he had expected the company to expect data center revenue of $400 million to $500 million above the consensus view, which would imply growth of about 10% on a sequential basis.

“If this outcome materializes, we feel the stock will remain stable given the recent rally over the previous two months combined with the very high expectations that have entered print,” he wrote.

See also: Three stocks of AI “enablers” to consider as Nvidia prepares another potential surprise

It will be interesting to see Nvidia's perspective on the Chinese market as the company faces Commerce Department restrictions on sales in the country but is working to modify products so they can still be sold there.

“More importantly, the evidence will likely not include any revenue coming from China’s newly developed chips,” Kumar wrote. “We see this revenue stream as likely to return in the April quarter following reports late last year of a new export control-compliant chip in the works.”

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Morgan Stanley's Joseph Moore noted that some believe Nvidia's guidance could call for more than $25 billion in quarterly revenue, but “while it's possible revenue could get there,” he and his team “see the company…
Steering is more conservative than that, at least initially.

Moore doesn't expect an “immediate strong reaction” to Nvidia's upbeat report, though he also doubts the stock will be sold.

“Our conversations with investors are mostly constructive about stocks but concerned about near-term expectations being too high, which typically creates a benign environment,” he wrote.

is reading: Nvidia is expected to be the best performer in the S&P 500 through 2025, according to this measure.

Raymond James' Srini Bagori commented that any “near-term decline” in Nvidia shares is likely to be “short-lived.”

He's optimistic about the company's upcoming B100 product, which could see a “rapid rollout,” and noted that “the processing power required for AI sees no signs of abating.”

Overall, Amazon.com Inc. is expected to

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It will prove a “major near-term driver” after Meta Platforms Inc.

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And Microsoft.

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They've been a big customer the last few quarters.

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