Nvidia is poised for a potentially explosive week with upcoming earnings catalyst.
Home Depot faces looming headwinds as it prepares to report earnings likely to disappoint.
U.S. stocks closed sharply lower on Friday, with the S&P 500 and the Nasdaq pulling back from their record highs, as surging energy prices ignited inflation fears that also drove Treasury yields sharply higher.
Source: Investing.com
Despite the selloff, it was a mostly muted weekly performance for the major averages, with the S&P 500 eking out a gain of 0.1%, while the Nasdaq Composite and Dow Jones Industrial Average fell 0.1% and 0.2%, respectively.
The coming week should be pretty low key for economic reports. Most of the focus will fall on the minutes of the Federal Reserve’s April FOMC meeting, the last meeting under the leadership of Jerome Powell.
Source: Investing.com
The odds of the Fed hiking interest rates by 25 basis points in December are approaching 50%, up from about 15% a week ago, according to the Investing.com .
Elsewhere, in earnings, ’s results will be the key update of the week as the reporting season draws to a close. The week ahead also offers an update on the retail industry, with Walmart, , Lowe’s, Target and TJX all posting quarterly results.
Source: Investing.com
Regardless of which direction the market goes, below I highlight one stock likely to be in demand and another which could see fresh downside. Remember though, my timeframe is just for the week ahead, Monday, May 18 – Friday, May 22.
Stock to Buy: Nvidia
Nvidia stands as the definitive stock to buy this week as it prepares to deliver what is widely anticipated to be a blowout quarter accompanied by a significant raise to forward guidance. The AI kingpin is expected to report a double-beat, surpassing consensus estimates on both revenue and earnings per share, driven by surging demand for AI infrastructure.
Results for the fiscal first quarter are due after the market closes on Wednesday at 4:30PM ET. A call with CEO Jensen Huang is set for 5:00PM ET. The expected post-earnings move for NVDA stock in the options market is about +/-8% up or down.
Source: InvestingPro
Consensus calls for earnings of $1.75 per share, marking a 116% year-over-year increase. Revenue is projected to surge 79% to $78.8 billion, amid elevated demand from AI data centers.
Analyst sentiment has been notably positive heading into the print. According to InvestingPro data, 34 of the last 35 analyst revisions were made to the upside, highlighting confidence in the company’s continued expansion.
Huang is likely to highlight how hyperscalers and enterprises are ramping AI infrastructure spend, reinforcing the view that the AI buildout remains in its early innings despite already extraordinary growth.
Source: Investing.com
NVDA stock closed at around $225 on Friday, pulling back after a strong run but with room to rally on positive catalysts: across every timeframe, from intraday to monthly, moving averages and indicators flash “strong buy.”
With the stock reflecting high expectations but continuing to reward positive surprises, Nvidia offers compelling momentum into the report and beyond for investors seeking exposure to the secular AI tailwind.
Trade Setup:
Entry: ~$225.00
Exit Target: $242.00 (gain +7.5%)
Stop-Loss: $213.00 (risk -5.3%)
Stock to Sell: Home Depot
In contrast, Home Depot is the stock to sell. The home improvement retailer reports Q1 results before the market open on Tuesday, and the setup points to a disappointing print and a cautious outlook that could weigh on shares.
Analysts have grown increasingly bearish on HD ahead of the print, with all 22 of the last revisions being made to the downside. The options market is pricing in a potential swing of +/-4.2% for shares post-earnings.
Source: InvestingPro
Wall Street sees the Atlanta, Georgia-based retail heavyweight delivering earnings per share of $3.41, falling 1.1% year-over-year, as margin headwinds persist from higher costs and promotional activity. Revenue is forecast to inch up 4.3% to $41.6 billion.
Weakening consumer spending, particularly on big-ticket renovation projects, is pressuring results amid persistent inflation, surging gasoline prices and high mortgage rates that squeeze discretionary spending.
Management has already signalled softness in core demand, and any reiteration or slight downward adjustment to full-year guidance would underscore ongoing cyclical pressures in housing and DIY.
Source: Investing.com
Trading at a 52-week low of $297.51, the stock sits more than 10% below its 20-day moving average and nearly 30% off last year’s high. The RSI at 32.72 is brushing oversold territory, but there’s little evidence of capitulation or reversal, and every major indicator (Ichimoku, ADX, MFI) confirms a powerful downtrend.
With the stock already under pressure year-to-date on macro challenges, a miss or tempered tone risks further near-term downside as investors rotate away from discretionary retail names facing consumer fatigue.
Trade Setup:
Entry: ~$297.50
Exit Target: $275.00 (gain +7.5%)
Stop-Loss: $312.00 (risk -4.9%)
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Disclosure: This is not financial advice. Always conduct your own research.
At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the , and the . I am also long on the . I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.
