Preview of NVDA Earnings: Nasdaq 100 at Risk Prior to Nvidia’s AI Champion’s Results

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Written By Vikas Jangid

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NVDA Key Points

  • In seven out of the last eight earnings reports, NVDA has surpassed analyst predictions, resulting in the stock climbing by an average of over 7%.
  • Options traders anticipate a significant move of approximately +/- 11% following Nvidia's earnings report, which is remarkable for a company valued at $1.8 trillion.
  • NVDA is experiencing its largest decline of the year thus far, dropping below its short-term 8-day EMA for the first time in seven weeks.

Nvidia’s Earnings

Nvidia is scheduled to report its Q4 earnings on Wednesday, February 21st after the market closes.

Nvidia’s Earnings Expectations

Analysts anticipate that Nvidia will report earnings per share (EPS) of $4.58 on revenue of $20.6 billion.

Nvidia Earnings Preview

Described as a market darling, Nvidia (NVDA) stands out as a stock frequently discussed at social gatherings and rarely doubted as a wise investment choice.

At the forefront of the AI revolution, Nvidia has witnessed its stock soar fivefold since the beginning of 2023, driven by skyrocketing demand for its semiconductor products.

Just last week, the company's market capitalization surged to $1.8 trillion, surpassing giants like Amazon and Alphabet/Google to claim the third spot among the most valuable US stocks.

With most of the "Magnificent Seven" companies reporting robust earnings, traders are now pondering whether Nvidia can sustain its impressive performance.

As depicted in the graphic below, NVDA has consistently surpassed analyst expectations for both earnings (by an average of 14%) and revenues (by an average of 7%) in seven out of the last eight earnings reports.

Following these strong results, the stock has typically risen by an average of over 7%.

NVDA Earning

As the week's release approaches, traders anticipate an exceptionally large move, with options' implied volatility indicating a potential +/- 11% swing in response to Nvidia's earnings report. This magnitude of movement is remarkable for a company valued at $1.8 trillion.

Beyond the company's financial results, investors are eagerly awaiting insights from Nvidia's CEO, Jensen Huang, regarding the trajectory of demand throughout the remainder of the year.

Any indications of a slowdown in the AI boom could trigger a significant bearish shift in the stock. Consequently, traders are understandably anxious in anticipation of the upcoming release.

NVDA Daily Chart

Screenshot 2024 02 21 124215
Source: Tradingview

From a technical standpoint, NVDA has experienced an extraordinary beginning to the year, skyrocketing from below $500 on New Year's Day to an intraday peak near $750 last week.

However, as of Wednesday morning, NVDA is undergoing its most significant decline of the year thus far, dropping below its short-term 8-day EMA for the first time in seven weeks.

Given the looming earnings report, it's not unexpected that some traders may opt to cash in their profits. However, the current selling pressure could also signal concern if the reported results fail to meet the high expectations set by traders.

Even if earnings and revenues technically exceed expectations slightly, but the stock doesn't witness a substantial rally, it could be interpreted as a bearish signal.

Following such an impressive surge, even a modest retracement of 38.2% or 50% according to Fibonacci analysis could push the stock back towards the $640 or $610 levels.

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