Nvidia Earnings and the Fed's Preferred Inflation Gauge: What to Know This Week

Nvidia's earnings report and the Federal Reserve's preferred inflation gauge, the personal consumption expenditures (PCE) price index, are set to take center stage this week. As investors await these key events, here's what you need to know to stay informed and make well-informed decisions.

Nvidia is expected to report its fourth-quarter results after the market closes on Wednesday. Analysts are widely bullish on the AI chipmaker's stock, with all but one of the 18 analysts tracked by Visible Alpha issuing "buy" or equivalent ratings. Their consensus price target of about $175 would imply 30% upside from Friday's closing price. Wedbush and Oppenheimer analysts, who reiterated $175 price targets, suggested booming demand for the company's advanced chips as Big Tech firms ramp up spending on AI infrastructure could lead to another strong quarter.

Nvidia is projected to post record quarterly revenue of $38.32 billion, up 73% year-over-year, according to estimates compiled by Visible Alpha. Net income is expected to climb to $21.08 billion, from $12.84 billion a year earlier. UBS analysts, who maintained a $185 price target, noted "investor expectations having crept up a bit recently," and added supply chain improvements could mean higher sales of Nvidia's Blackwell line. UBS nearly doubled its estimate for Blackwell's contribution to fourth-quarter revenue to $9 billion, up from $5 billion previously.



Oppenheimer also indicated the rapid rise of Chinese AI startup DeepSeek could ultimately prove "positive" for the chipmaker, as competition pushes Nvidia's American clients to step up their efforts in the AI race instead of pulling back.

Nvidia shares dropped 4% to close at $134.43 Friday amid a broader market decline. They've gained about three-quarters of their value over the past 12 months.

The PCE price index, the Federal Reserve's preferred measure of inflation, is set for release at 10 a.m. ET on Wednesday. Economists polled by Dow Jones expect a year-over-year increase of 2.8% for the core reading, which excludes food and energy. Investors will look through the data for indications on how the Fed may proceed on its rate policy at its December meeting.

A slowdown in inflation, as indicated by the PCE index, could have varying impacts on different asset classes. While equities might not necessarily benefit, bonds could see an increase in prices and a decrease in yields, and commodities could experience a decrease in prices, depending on the specific commodity and its role in the economy. The easing inflation also has implications for the Fed's monetary policy decisions, potentially leading to interest rate cuts if the trend continues.

In conclusion, Nvidia's earnings report and the PCE price index are two key events to watch this week. As investors await these developments, it's essential to stay informed about the latest data and its potential impact on various asset classes to make well-informed investment decisions. Keep an eye on Nvidia's stock price and the broader market reaction to the PCE price index to capitalize on any opportunities that may arise.