What is driving the stock price of Nvidia?

Nvidia's stock price is currently in a "rerating" phase, where its share price has surged despite a slight dip in forward earnings per share (EPS), as investors are willing to pay a higher multiple for the company's expected profits.

What are the two key factors that explain most big stock moves, according to the article?

The two key factors are forward EPS (expected profits) and forward P/E (what investors are willing to pay for those profits).

Home / Business and Economy / Tech Giants Diverge: Nvidia Surges, Amazon Struggles

Tech Giants Diverge: Nvidia Surges, Amazon Struggles

15 Aug

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Summary

Nvidia's stock price and profit expectations closely linked
Amazon's profit estimates drop, but stock price still hits records
Analysts track forward earnings and price-to-earnings ratios to understand stock movements

Tech Giants Diverge: Nvidia Surges, Amazon Struggles

As of August 15, 2025, the stock market remains on a record-breaking run, with the NASDAQ and S&P 500 reaching new highs almost daily. Analysts are examining the factors driving the performance of the biggest stocks, particularly whether it is earnings or valuation that is fueling the rally.

The article delves into the fundamental concepts that Wall Street uses to analyze stocks, including forward earnings per share (EPS) and the forward price-to-earnings (P/E) ratio. It explains how these two metrics work together to determine a stock's price, with the share price equaling the forward P/E multiplied by the forward EPS.

The article then examines how these concepts are playing out in the five largest stocks in the S&P 500. Nvidia, for example, is currently in a "rerating" phase, where its stock price has surged despite a slight dip in forward EPS, as investors are willing to pay a higher multiple for the company's expected profits. In contrast, Amazon is in a "derating" cycle, with falling profit estimates and a cooling multiple, making it harder for the stock to sustain its recent record-breaking run.

Analysts advise investors to closely monitor the trends in forward EPS and forward P/E to understand the drivers behind stock movements, as these two levers explain the majority of long-term price changes in the market.

Disclaimer: This story has been auto-aggregated and auto-summarised by a computer program. This story has not been edited or created by the Feedzop team.