Josh Gilbert, market analyst at eToro, shares his three things to watch in Australia in the coming days.
Nvidia earnings
It’s easy to see why Nvidia is branded as magnificent, with a five-year return of over 1,500%. In that time, Nvidia has become a Wall Street darling that continues to reward investors, taking full advantage of the AI revolution.
Last week, the artificial intelligence computing company claimed another feather in its cap, taking the title of the third largest company on the S&P500. Within the last year, Jensen Huang and his team at Nvidia have grown its earnings by 500%, a remarkable feat that’s even more remarkable given Wall Street expects that growth to continue.
This week, consensus has Nvidia reporting earnings of US$4.56 with revenue of US$20.26 billion. If the last three results are anything to go by, we could even expect numbers much higher than that.
Investors will be watching its data centre business, which has driven growth thanks to AI, but the main focus will be on guidance. Shareholders will want to hear that sales aren’t slowing down and that the AI boom is not just a flash in the pan. With such outsized gains in less-than-optimal conditions, anything but perfect will put shares on the back foot.
Pilbara Minerals half-year results
If you take a look at the worst performers on the ASX200 this year, it's filled with miners – mainly lithium miners. It’s been a torrid few years for the price of lithium as it continues to freefall, weighing heavily on local miners who enjoyed a strong 2022 during peak prices for the asset.
While the pricing environment has softened for the time being, investors should not lose sight of the significant demand for lithium, with EV growth still high at around 30% this year.
The Australian investor favourite in lithium, Pilbara Minerals, reports this week and shares have held up reasonably well compared to other names. That's because it has a better balance sheet than most to get it through this lithium winter, allowing it to continue expanding and growing production.
Income will fall significantly, but that is to be expected, so investors should instead focus on commentary around production. Ultimately, Pilbara is at the whim of the lithium price but the business looks the best positioned to navigate this challenging period.
Australian Quarterly Wage Index
Michele Bullock and the RBA have continued to see data move in the right direction, with unemployment last week lifting more than expected, showing the labour market is loosening. Rising unemployment will be a significant reason for the RBA to cut rates, with market pricing looking to as early as June for the first cut.
This week, the board receives another key data point from the Quarterly Wage Index. With capacity in Australia’s job market growing, wages should not see too much pressure to the upside from here, given that we will likely see the unemployment rate grow during 2024, all of which is good news for inflation.
The Wage Price index is expected to lift to 1% QoQ and to 4.1% year-over-year.