Why NVDA’s Bullish Earnings Lead to Drop

$NVIDIA Corp(NVDA)$ once again delivered stellar earnings, reaffirming its position as the undisputed leader in AI-driven computing. The company continues to capitalize on surging demand for AI infrastructure, boasting record revenue across key segments. Yet, despite the solid beat and guidance, the stock’s typical post-earnings volatility makes me cautious about jumping in immediately.

Nvidia reported record-breaking revenue of $35.1 billion for Q3 2024, reflecting a 17% sequential growth and an astounding 94% increase year-over-year. The numbers are impressive across the board:

• Data Center Revenue: $30.8 billion, up 17% from Q2 and up 112% year-over-year. This growth highlights the explosive demand for Nvidia's AI and machine learning solutions.

• Non-GAAP EPS: $0.81, up 19% sequentially and 103% year-over-year.

• CEO Jensen Huang emphasized the transformative impact of AI across industries and countries, highlighting Nvidia’s Hopper and Blackwell GPUs as driving forces behind the company’s growth trajectory.

In short, Nvidia’s performance underscores its dominance in the AI revolution. The company is not only riding the AI wave — it’s defining it.

My Analysis

Despite the exceptional earnings, Nvidia’s stock often behaves in a predictable post-earnings pattern: it sells off, and trades sideways for a while before making its next significant move. I expect a similar scenario to play out this time.

Here’s why I’m in no rush to buy NVDA immediately:

1. Resistance at $149.50: While the earnings beat reinforces Nvidia’s bullish long-term thesis, the stock needs to convincingly break above $149.50 to resume its bullish trend. Until then, it’s likely to remain range-bound, consolidating recent gains.

2. Support Zone Around $134–$137: I see an opportunity to add Nvidia to my portfolio if the stock pulls back into this range. This level has historically provided strong support, making it an attractive entry point for a long-term position.

3. Patience Is Key: Nvidia’s post-earnings volatility is nothing new. The stock often sees sharp moves in both directions after earnings as traders digest the results and future potential. Rushing into a position now, when the stock is near the top of its range, increases the risk of buying into a temporary peak.

I remain bullish on Nvidia’s long-term potential. The AI revolution is still in its early stages, and Nvidia is uniquely positioned to benefit from increased investment in AI infrastructure. The company’s growth in data center revenue and its dominance in GPUs make it a cornerstone of the AI-driven economy.

That said, a sustained breakout above $149.50 would likely require a fresh catalyst, such as:

• Stronger-than-expected adoption of Hopper and Blackwell GPUs.

• Signs of macroeconomic stability boosting enterprise spending.

• Updates on Nvidia’s investments in industrial robotics and agentic AI.

My Plan

For now, I’m taking a wait-and-see approach:

• If the stock falls into the $134–$137 range, I’ll look to initiate a position, confident in Nvidia’s long-term growth story.

• If NVDA trades above $149.50 with strong momentum, I’ll consider adding more on confirmation of a bullish breakout.

Patience is crucial here. Nvidia is a fundamentally strong company, but its stock often goes through extended periods of consolidation. I’d rather wait for a pullback or a clear breakout than chase the price after an earnings-induced spike.

What’s Your Take on NVDA?

Are you adding on the pullback, or do you see Nvidia’s valuation as stretched at these levels?

Let’s discuss about this AI powerhouse!

@MillionaireTiger @Tiger_comments @Daily_Discussion @CaptainTiger @TigerSG

Disclaimer: This is a general analysis and not financial advice. Always conduct your own research before making any investment decisions.