Nvidia suffered a massive hit on Tuesday, with its market capitalization decreasing by a staggering $78 billion in a single trading day. This decline marks the largest drop in valuation that Nvidia has ever experienced, as reported by Dow Jones Market Data.

Investors Tread Cautiously Before Earnings Report

The timing of this market turmoil for Nvidia is crucial, as the company is scheduled to release its quarterly results on Wednesday after the market closes. In light of this impending financial announcement, investors are treading cautiously, unsure of what the chip maker's earnings report will reveal.

Analysts Predict Earnings and Revenue Figures

On Tuesday, Nvidia's stock price fell by 4.4% to $689.20, underlining the gravity of the situation for the tech giant. The company's market capitalization plummeted by $78 billion, causing widespread concern among shareholders and industry experts.

HSBC Analyst Provides Insight

Despite the bleak market performance, HSBC analyst Frank Lee recently increased his target price for Nvidia's stock from $800 to $835, maintaining a Buy rating. Lee tempered expectations for a significant earnings boost, foreseeing that Nvidia's sales would meet consensus estimates.

Future Prospects and Projections

Analysts anticipate that Nvidia will report an earnings per share of $4.59 and revenue totaling $20.4 billion for the quarter. Lee expressed confidence in Nvidia's long-term prospects, particularly highlighting the company's expansion into markets such as central processing units (CPUs).

Looking Ahead to Fiscal Year 2025

Lee's target price calculation for Nvidia is underpinned by a price-to-earnings multiple of 35 times the company's estimated earnings for fiscal year 2025. While acknowledging the market's elevated expectations, Lee believes that Nvidia may face challenges in surpassing its previous year's performance in terms of sales and earnings surprises.

Chip Maker Stocks Performance

Other chip maker stocks showed a mixed performance in the market. Advanced Micro Devices experienced a decrease of 4.7%, while Intel saw an increase of 2.3%. The Biden administration engaged in discussions to allocate over $10 billion in subsidies to Intel, as reported by Bloomberg from sources familiar with the matter.

Competition and Future Prospects

During its upcoming earnings call, Nvidia's management is expected to address concerns regarding competition from companies like AMD. Particularly, the market is searching for chips capable of handling both training tasks and inference workloads, which generate results from AI systems.

Analyst Ruben Roy from Stifel highlighted potential pricing challenges for Nvidia due to AMD's positioning in the market. However, early feedback on Nvidia's GH200 CPUGPU hybrid system has been positive, especially regarding its adoption as an Inference platform. Roy maintained a Buy rating on Nvidia stock with a $865 target price, based on a price-to-earnings multiple of 35 times the company’s forecast earnings for fiscal 2026.

Events and Market Performance

Nvidia announced its GTC 2024 conference scheduled from March 18-21, featuring executives from renowned companies like Microsoft, Google under Alphabet, and Meta Platforms.

This year, Nvidia shares have exhibited an impressive 40% increase in value through Tuesday's closing. In comparison, the S&P 500 index saw a rise of 4.3%, while the Nasdaq Composite Index experienced a 4.1% gain.

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