When a normal company announces its quarterly earnings, investors will carefully study these reports and analyze the fluctuations in stock prices. However, when the earnings come from $NVIDIA (NVDA.US)$ perhaps the entire financial system begins to be influenced by it.

On Wednesday (November 20) in post-market trading, this chip manufacturer saw its stock drop by over 5%, despite the company's financial report showing a year-on-year revenue and profit increase of about one hundred percent. The only obvious issue is that the company's forecast for fourth-quarter revenue is $37.5 billion, which is only slightly above analysts' average expectations, and it did not meet the highest expectations from analysts. The company's growth rate has been faster in the first two quarters of this year.

However, the market's nervous sentiment is reasonable, as Nvidia's market cap fluctuations increasingly affect everyone's wealth.

The company's market cap is $3.6 trillion, making it the largest company by market cap globally, accounting for up to 7% of the s&p 500 index. Back in 2000, computer networking giant cisco briefly became the world's highest-valued company, but at that time, its weight in the s&p 500 index was less than 4%.

As of Wednesday, Nvidia's stock price was $145.89, having risen over 200% since the beginning of the year, significantly contributing to the s&p 500 index's 24% increase so far this year.

This leads to a situation where when Nvidia performs well or has bullish news, overall market sentiment rises, and vice versa.

Analysts from bank of america calculated this week that investors expect Nvidia's performance to cause the index to fluctuate by 1%, a weight even higher than their estimate of the impact of us inflation data on the index.

It is evident that this interconnection truly exists. As Jensen Huang jokingly mentioned during the earnings conference on Wednesday, "Almost every company in the world seems to be involved in our supply chain."

Subsequent trend.

Nvidia currently still possesses enviable scale and scarcity advantages, and supply constraints keep its chip prices high. The company stated at its latest earnings conference that the next generation GPU—the Blackwell chip—has now fully entered production, and it is expected that this product will remain in short supply over the next several quarters, with market demand for its Blackwell chip exceeding the "billions of dollars" anticipated for this quarter.

Meanwhile, from Saudi Arabia to Denmark, governments are seeking to establish their own nationally supported AI projects, which heavily rely on Nvidia chips, indicating that this trend could continue.

According to data from the London Stock Exchange Group (LSEG), Nvidia is expected to have a pe ratio as high as 34 times, the reasonableness of this figure is still debatable. Additionally, while Nvidia's customers are paying for chips driven by the prospects of AI, it remains to be seen whether their customers—and their customers' customers—will also pay for the resulting services.

Analysts point out that Nvidia currently has two advantages. First, compared to Cisco's pe ratio of 130 times in 2000, Nvidia's valuation is far below that; second, before the internet bubble burst, Cisco's profit was 20% of its sales, while Nvidia's is currently close to 60%, and it is expected that the company will continue to drive the market in the near future.

Regarding Nvidia stocks, Louis Navellier, founder of market consulting firm Navellier & Associates, stated that regardless of Nvidia's earnings report performance, he would not sell Nvidia shares, saying, "I have never seen any stock with such strong monopoly and such powerful influence."

Analysts at the US investment bank Stifel raised Nvidia's target price from $165 to $180 ahead of the earnings report. They also stated that they expect this chip manufacturer’s total target market could exceed $100 billion by 2025, and long-term opportunities might be close to $1 trillion, "We expect that most medium to short-term opportunities will come from high-performance computing, hyperscale and cloud datacenters, as well as enterprise and edge computing. The demand for AI computing continues to exceed supply."

Before the release of this earnings report, Mizuho analyst Jordan Klein also stated that investors are optimistic about expectations for 2025, as a large number of Blackwell chip orders and the release of pent-up demand suggest that nvidia's business is likely to accelerate in the second half of the 2026 fiscal year.

Editor/rice