From The Nasdaq Stock Market:

Investors are concerned about Nvidia’s valuation ahead of its quarterly results, leading to a 5.3% drop in its stock, with a potential decline to be the largest in over eight months.

Nvidia has replaced Alphabet to become the third most valuable U.S. company, with a market capitalization of $1.79 trillion, driven by a more than 40% surge in stock price this year.

Analysts expect Nvidia’s earnings per share to be $4.56, with a revenue increase to $20.378 billion. The company’s quarterly results will be released on Feb. 21.

Nvidia shares have rallied significantly this year, but are at risk of a decline if earnings fall short of expectations. The company needs to deliver strong guidance to maintain its positive trajectory.

Options for Nvidia are anticipating an 11% swing in either direction following the results. Other AI-focused stocks, including Super Micro Computer and Arm Holdings, marked substantial declines.

Nvidia’s shares are currently trading at 32 times its forward earnings estimates, compared to the industry median of 25.4. Advanced Micro Devices also recorded a nearly 6% decline.



Read more: Nvidia’s stock rally sputters ahead of quarterly report