Week ahead: Nvidia earnings come amid return of meme stock mania

Meme stock mania returned with a vengeance after Roaring Kitty resurfaced on X, formerly Twitter, after a three-year hiatus. The likes of GameStop and AMC shares rose and fell in extremely volatile trade as retail traders piled on.  

Does the buzz continue, or will it splutter out? It comes in a key week for stock markets with investor darling Nvidia due to report earnings. Meanwhile, we look ahead to the Reserve Bank of New Zealand interest rate decision, some key UK inflation numbers and PMI readings.

Here are the week’s key events:

Monday, May 20th: German PPI Data, Zoom Earnings

Chinese rate decisions on the 1-year and 5-year loan prime rates are due up. It comes shortly after the People’s Bank of China announced plans for to sell 1 trillion yuan ($138bn) of long-dated government bonds in an attempt to stimulate the economy.  

European markets may be quiet due to the Whit Monday holiday, though there are the German PPI and WPI inflation reports on the docket.  

The US session is marked by the absence of any data releases; however, investors may be looking to some earnings reports after the market close from Zoom and Palo Alto Networks. Earnings at Zoom topped analyst expectations last quarter, sending shares briefly higher, but the stock has suffered greatly since the pandemic peak reached about 90% from its record high.

Earnings: Palo Alto Networks (PANW), Zoom Video (ZM)

Tuesday, May 14th: Reserve Bank of Australia Minutes 

Minutes from the last RBA meeting are the early highlights. At the last meeting the Reserve Bank of Australia kept rates at a 12-year high of 4.35% and signalled they may not be cutting anytime soon with inflation risks skewed to the upside, though it stopped short of adopting a tightening bias.  

The minutes may show whether there is a hawkish mood among policymakers than had been thought. Canada’s latest inflation data will be important for CAD with markets expecting a cut in June as inflation comes down and growth cools.  

"As labour markets continue to weaken and inflation readings in Canada also come lower, all ducks seem to be in a row for the Bank of Canada to start cutting the overnight rate as soon as June, with 100 basis points of total cuts expected for this year,” RBC said in a note.

Earnings: XPeng (XPEV)

Wednesday, May 15th: Nvidia Earnings, UK CPI Inflation, FOMC Minutes

All eyes are on Nvidia earnings. The stock has ridden the AI boom and helped lift the broader market substantially. Will management guide up again? Deutsche Bank analysts say they are not sure there is much left in terms of surprises and are stuck with a hold rating.

“Overall, we remain impressed by NVDAs best-in-class technology roadmap and believe AI fervour by its customers is likely to be sustained, yielding yet another strong quarter/ guide,” they wrote.

“However, investors apparently have become more discerning of AI-driven upside in earnings season QTD, and we believe continued fundamental strength is already well understood.”

Wells Fargo was more upbeat, arguing Data Center revenue could reach $23-$24 billion vs the Street estimate for approximately $21.1bn. The bank’s analysts raised its Nvidia forward estimates and upped the target price on the stock from $970 to $1,150.

Elsewhere look out for the latest UK CPI inflation print – another decline could make the Bank of England more likely to cut in June; whilst the Reserve Bank of New Zealand is expected to stand pat on rates. FOMC minutes will be closely read over.

Earnings: Nvidia (NVDA), Snowflake (SNOW)  

Thursday, May 16th: PMI Data

It’s PMI day with services and manufacturing updates from the world’s major economies. Eurozone PMIs a month ago showed the area’s economy coming close to stabilising with services gaining some momentum, whilst the rate of manufacturing decline softened.  

The UK data was better – the services PMI rose to 55.0 as spending picked up and the country exited a shallow recession. However, input cost inflation rose to the highest since August 2023. Manufacturing activity in the US didn’t live up to expectations in April after turning positive in March for the first time in a year and a half.

Friday, May 17th: UK Retail Sales, Consumer Confidence Surveys

The week rounds off with a smattering of economic data. UK retail sales and consumer confidence surveys could move GBP crosses a touch early doors before Canada’s retail sales figures pick up the slack.  

US durable goods orders will provide an important leading indicator of demand, whilst the latest UoM inflation expectations survey could prove interesting after the NY Fed survey showed one-year-ahead inflation expectations had jumped from 3.0% to 3.3%.

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