Why the best long-term idea is “Buy Nvidia and put it away”

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An earnings report from NVIDIA Corporation (NASDAQ:NVDA) will be closely watched by investors and could be a market-leading indicator, a market strategist tells Benzinga ahead of results on Aug. 28 after the market close.

Nvidia’s earnings from the Watch: Analysts expect Nvidia to report revenue of $28.46 billion in the second quarter, up from $13.51 billion in the second quarter last year, according to data from Benzinga Pro.

Estimates call for Nvidia to report second-quarter pre-share earnings of 64 cents, compared with 27 cents per share in last year’s second quarter.

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Nvidia has beaten revenue estimates for seven consecutive quarters and nine of the last 10 quarters. The company also beat EPS estimates in six consecutive quarters and in eight of the last 10 quarters.

Freedom Capital Markets Global Strategist Jay Woods emphasized the importance of Nvidia’s earnings report to the market during an interview on Benzinga’s “PreMarket Prep.”

Woods said there was a lull in Magnificent 7 shares, including Nvidia.

“Now we’re seeing a consolidation of these Mag 7 names,” Woods said.

The market strategist said that Nvidia was the indicator of the market change last August.

On August 23, 2023, the stock gapped at the open, filled the gap and closed slightly higher after the earnings report. In the months that followed, the stock fell from $480 (now adjusted to $48) to $400 (now adjusted to $40) before breaking out in January 2024.

Woods said Nvidia is the only stock to watch next week and that the $140 level could be a key measure ahead of earnings, a level the market strategist doesn’t see the stock reaching before Wednesday.

Why it’s important: Woods calls Nvidia a market leader and a top stock, one that could move the markets.

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The market strategist said the stock could take a lot of boats with it, depending on how investors react to the earnings.

As one of the most valuable companies in the world, Nvidia has a large weighting in many indices and ETFs, Woods warned.

The SPDR S&P 500 ETF Trust SPY lists Nvidia as the third largest holding at 6.5%, behind Apple Inc AAPL at 6.9% and Microsoft Corporation MSFT at 6.6%.

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Woods cautioned that investors should be aware that a new rebalancing of the SPDR Select Technology ETF XLK has made Nvidia more important than Apple. The fund’s current weightings have Microsoft in first place at 21.2%, Nvidia in second at 20.9% and Apple in third at 4.9%.

“It would be good to know that Nvidia (is) now more important than Apple is.”

While Woods is cautious about Nvidia’s momentum ahead of its second-quarter results, he still sees the stock as one of the best long-term picks.

“My best idea is to buy Nvidia and put it away and not look at it.”

Woods recalled his father buying Nvidia stock after hearing him talk about it on TV in 2019. His father put the stock away and forgot about it before asking Woods what a stock split meant. 10 to 1 for his stake. Woods said the investment went from $3,000 to more than $100,000.

The example could perfectly illustrate Benzinga’s series of “if you invested $1,000” stories about how a small investment could pay off over time based on key catalysts and events.

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This article Nvidia is next week’s best stock, says market strategist: Why the best long-term idea is to ‘Just buy Nvidia and put it away’ originally appeared on Benzinga.com