The stock market is going through a volatile time, and it's hard for investors to get a clear sense of its direction. The Nasdaq Composite (^IXIC 2.09%) is perhaps the best example of all the major market indexes, as it has tried to recover from recent losses and set new all-time highs, but has thus far fallen short. As of 1 p.m. EDT Friday, the Nasdaq was down almost half a percent, having given back gains from earlier in the session.
When markets are choppy, it pays to keep your eyes on fundamental business performance. That will make a couple of Nasdaq stocks especially important next week, as NVIDIA (NVDA 4.28%) and Zscaler (ZS 2.20%) are set to report their latest financial results. What these two tech companies say could play an instrumental role in dictating where the Nasdaq and the broader stock market go from here.
NVIDIA is set to report its first-quarter results after the market closes on Wednesday. The stock is up almost 3% Friday and has climbed an impressive 67% since this time last year.
NVIDIA's fourth-quarter financials, which it announced back in February, were extremely strong. Revenue jumped 61% year over year as the chipmaker's gaming and data center segments set new records for sales. For its full fiscal 2021, which ended Jan. 30, revenue climbed 53%. Overall, NVIDIA took advantage of a number of positive trends, including the increased popularity of gaming and the huge surge in demand for computing power as millions of professionals had to transition to working from home.
Shareholders may have also gotten a little boost Friday as NVIDIA said it would do a four-for-one stock split, subject to shareholder approval. Though that move won't result in any real change in the value of NVIDIA, stock splits can buoy share prices because they make investors feel more optimistic about the companies that perform them. Following this one, shareholders will own four times as many shares, with a stock price roughly a quarter of where NVIDIA trades currently.
Management already said last month that its preliminary figures for the first quarter were coming in above its guidance for $5.3 billion in sales. Indeed, the consensus projections among those following the stock are for nearly $5.4 billion on the top line, and earnings of $3.27 per share, both of which would be about 80% higher than this time last year. If NVIDIA can match or surpass those figures, it bodes well for the chipmaker.
Meanwhile, Zscaler has had an even more auspicious performance in the past year. The cybersecurity specialist's stock has risen by 122% over that time frame, but it has lost about 15% of its value so far in 2021. Zscaler is set to announce its fiscal third-quarter results on Tuesday after the market closes.
Zscaler's results from last quarter showed continuing growth. Revenue climbed 55% on a 71% rise in calculated billings, and it managed to boost its adjusted net income slightly from year-earlier levels. The company's client count topped the 5,000 mark, including fully a quarter of the Forbes Global 2,000 list of top companies.
Zscaler has emerged as a disruptor in cybersecurity primarily because of its leadership in promoting its "zero trust" platform. Its tools continually verify that those who are working within a company's network have the right credentials and permissions to access the data and resources they are using. This reduces vulnerabilities, and allows Zscaler to defend systems against many of the types of attacks that have led to security breaches in other platforms.
Investors have high hopes that the company will show further strong growth in its fiscal third-quarter numbers. If it does, then Zscaler could claw back its year-to-date stock declines and move toward delivering additional positive returns for investors.