3 big things we’re watching in the stock market next week
Here it is again: Nvidia’s earnings week is here. The world’s most valuable company and the leading manufacturer of artificial intelligence chips will report first quarter earnings on Wednesday night. Indeed, it will drive a ton of action on Wall Street this week. But it’s certainly not the only thing on our radar. A pair of other Club Holdings are also reporting. Also, Google has a much-anticipated developer conference, where we expect AI updates to appear. Here’s a closer look (all earnings and ratings are available via LSEG): 1. Retail benefits: Home Depot kicks off our group earnings week on Tuesday morning. Analysts at Morgan Stanley put it well in a paper last week, saying the U.S. housing market “continues to bounce back.” Therefore, we do not expect to see a turning point in Home Depot’s results because mortgage rates and housing activity are not correlated. The bottom line is that the stock has been crushed since February, when the 30-year fixed mortgage rate began to rise, and is now trading at a multi-year low. That means expectations for Home Depot’s results are low. Wall Street expects same-store sales growth for Home Depot in the first quarter to be 0.8%, according to FactSet. When Home Depot reported its Q4 results in February, it was just days before the start of the Iran war, which has weakened the economy and fueled inflation. However, Bernstein analysts said they don’t expect Home Depot to revise up its full-year guidance for same-store sales growth of 2%, as the forecast “takes into account a wide range of factors.” Bernstein also said Home Depot’s SRS Distribution subsidiary may benefit from hurricane-related maintenance in the quarter, so we’ll be watching to see if that holds true. Home Depot acquired SRS in 2024 as part of a strong push for professional contractors who rely on wholesale distributors. It also completed the acquisition of an HVAC distributor. Rising inflation has made it difficult for incoming Federal Reserve Chairman Kevin Warsh to cut interest rates quickly. But we’re holding on to Home Depot because, at some point, the housing market has to wake up. Revenue: $41.53 billion EPS: $3.41 The TJX Companies partner will rise Wednesday morning. The big difference here is that the economic environment actually plays into TJX’s hands as a retailer known for offering high-quality merchandise at great prices. If you’re feeling stressed by high gas prices but need a new pair of jeans, there are few better places to go than TJ Maxx or Marshalls. For that reason, we expect TJX to be relatively well positioned to continue to attract buyers. The consensus is for same-store sales growth of 4.1% in the quarter, and we want to continue to see increased activity leading to that result. One thing to watch will be TJX’s comments on freight forwarders. In recent quarters, TJX’s margins have benefited from lower inventory levels. But they went the wrong way because of the Iran war. Overall, we remain confident in TJX as a good long-term stock, which is why we bought more shares on Friday. Remember, when it comes to guidance, TJX executives like to under-promise and over-deliver. Revenue: $13.98 billion EPS: $1.01 2. Nvidia earnings: Now for Wednesday night’s big event. “Hitting and lifting” is a minimum requirement. That means Nvidia’s reported results need to beat consensus, and its guidance for the current quarter needs to exceed expectations, prompting analysts to raise their estimates. This has been a bar for years now. And with Nvidia shares finally emerging from a months-long slumber to new heights, that’s still the case this time around. One problem Nvidia continues to face: even if its results are good, some investors remain worried about the sustainability of the size. So, anything CEO Jensen Huang and CFO Colette Kress can do Wednesday night to ease concerns that the investment cycle may be moving too quickly will be key to the stock’s reaction to the release. The market will also listen to comments on Nvidia’s appearance in the $1 trillion sales forecast released by Huang in March at his GTC conference. That includes the sale of its Blackwell and Rubin plans from last year through 2027. Undoubtedly, Nvidia faces growing competition in the AI chip space both from graphics processing unit (GPU) maker Advanced Micro Devices and custom silicon suppliers such as Broadcom and Marvell, which work with major technology companies to design specialized chips. But we want to hear Huang tackle this and discuss the energy efficiency and total operating costs compared to the competition. Away from technical debates, another theme we saw in Wall Street’s preview notes last week was the return of capital to shareholders. Nvidia is flush with cash and has more to come as orders are filled. As a result, many analysts are looking for an update on Nvidia’s plans to return some of it to investors – perhaps through a dividend boost or a major increase in share repurchase authorizations. This Nvidia company paid a dividend of 0.02 %. It paid out $974 million in dividends in its 2026 fiscal year, which ended in January. In acquisitions, Nvidia repurchased $40.09 billion worth of stock in the last fiscal year and had $58.5 billion left under share repurchase authorizations. A big number, for sure. But this is a company worth 5.56 trillion, so as a percentage of market capitalization, it’s about 1%. We are not sure which method we choose to maximize returns. On the other hand, the increase in profits shows confidence in the sustainability of demand. On the other hand, getting a yield on anything that can increase the shareholder base to attract income-seeking investors can mean committing to annual fees that could be used for research and development or strategic investments and acquisitions (we know Nvidia has been busy). Consider that, to achieve a 2% dividend yield on a $5.56 trillion company, Nvidia would need to post north of 100 billion a year. That yield would be quite respectable, and possible with Nvidia’s free cash flow — expected to be $182 billion this fiscal year and higher in the second after that, according to FactSet. But, sometimes, we have to consider the smaller dollar amount. That’s a ton of money to commit to sending every year. Sure, Nvidia may come back later if it thinks it needs the cash, but the dividend cut is probably considered a bad sign of future demand. A larger buyback, on the other hand, will return cash, increase future earnings per share by reducing the number of shares, and not require the group to deliver future payments in excess of the authorized amount. It will not, however, attract income-oriented value investors the way a larger dividend can. Either way, it’s an interesting argument, and we’ll soon find out if Nvidia takes it either way. Revenue: $78.67 billion EPS: $1.76 3. Google Event: Alphabet hosts its annual I/O developer conference on Tuesday and Wednesday. Analysts at Bank of America say it could strengthen Google’s AI position. But with hopes raised, they warned that “the lack of a ‘wow’ announcement could weigh on the stock.” Rumors are flying that Google will unveil or tease its Gemini 4 AI model – and that’s a big deal because the launch of Gemini 3 in November was a huge success and sent shares rallying. Another thing we’re looking at is how Google is connecting AI to all of its other offerings, which could help ease concerns about the return on its capital spending. In particular, we want updates on new AI capabilities – AI systems that can perform tasks and take action without human intervention. Additionally, robots, AI wearables like smart glasses, and Waymo’s wider rollout will also be interesting. Also on Wednesday, Alphabet will host its Google Marketing live event, which is important to watch to highlight AI monetization and new marketing tools. Investors are always looking for more clues that traditional Google Search is still growing despite the adoption of the AI model. The good news is that the questions are already very high, CEO Sundar Photosi said on the company’s first quarter earnings call, saying that the use of AI is actually driving the use of Google Search. Google’s internal TPU chips are important to its AI efforts, but since the company recently unveiled the eighth-generation family at the Google Cloud event in late April, we’re expecting less of any big silicon news. Week ahead Monday, May 18 Before the bell: Baidu (BIDU) Tuesday, May 19 Home sales pending at 10 am ET Before the bell: Home Depot (HD) , Vertiv (VRT), Amer Sports (AS), KE Holdings (BEKE), Bilibili (BILI) After the bell: Keysight (KEYS) , Toll Federal, Market Wednesday, Toll May 2 Meeting minutes committee at 2 pm ET Before the bell: TJX Companies (TJX), Target (TGT), Analog Devices (ADI), VF Corp (VFC), ZIM Integrated (ZIM), Lowe’s (LOW), Arcos (ARCO), Hasbro (HAS), Baozun (BZUN) After the bell: Nvidia, Urban INVDA (URBN) Thursday, May 21 First jobless claims at 8:30 am ET Housing starts at 8:30 am ET S & P Global Flash US PMI at 9:45 am ET Before the bell: NIO (NIO), Deere (DE), Walmart (WMT), Advance Auto Parts (AAPVIS), NetPS: After the Shop (DECK), Take-Two (TTWO), Workday (WDAY), Zoom (ZM), Copart (CPRT), Ross Stores (ROST) Friday, May 22 May 22 University of Michigan consumer sentiment survey (final) at 10 am ET Before the bell: Booz Allen Hamilton (BAH), BJ’s (BJ) (Jimtable Cramer’s NVDA Channel, NVDA Trust’s HDX here. for a full list of stocks.) 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