Global attention! "The most important financial report in the universe" Nvidia's financial report is about to be released. Morgan Stanley believes that Nvidia's fundamentals are still strong, even more optimistic than in the previous two months. However, the "Sword of Damocles" of export controls hangs high, casting a shadow over Nvidia's prospects.
On February 24, Morgan Stanley analysts Joseph Moore, Mason Wayne and others released reports stating that in the past two months,$Nvidia (NVDA) $Hopper demand has increased, and GB200 has also made progress, but due to the possibility of further export controls, Nvidia's performance guidance is cautious, believing that there is a high probability that it will be consistent with market consensus and match the growth trend of the previous quarter.
Nvidia's financial report will be announced after the market closes on February 26, Eastern Time.
A few months ago, the market was worried about Hopper's sales, believing that its demand was slowing down, and Blackwell, especially the GB200 form, was also facing difficulties in the early development. But Morgan Stanley said that it is more comfortable with both issues at present.
According to Morgan Stanley's survey, although it is slightly weak compared with the previous quarter,Demand for Hopper has picked up overall。 Morgan Stanley said that demand for Hopper chips among cloud service providers remains strong, although part of the demand may be due to "some international customers putting aside concerns about economic longevity and placing early orders due to concerns about future export controls." But the improvement in overall demand still provided strong support for Nvidia's performance.
The H20, H100 and H200 performed strongly. Morgan Stanley pointed out that recent rumors of H20 price cuts may be outdated, as there seems to be no problem with pricing. Morgan Stanley also said:
"While early sourcing is not the optimal source of demand, it is a good transition considering that Hopper's production is coming to a natural end,Bridges Blackwell's strong second half performance。 ”
Nvidia's next-generation chip, Blackwell, has also made important progress. Morgan Stanley pointed out that the "unprecedented complexity" of the Blackwell system highlighted by management is still a problem, but the biggest technical problem has been solved.The GB200 has weathered the storm, production is expected to gradually resume, and the market may start to see rack counts tweaked higher。
However, Morgan Stanley also warned that some restrictive issues still exist, and considering the many aspects of the GB200 design, Blackwell CoWoS figures should not be immediately converted into revenue.
The gross profit margin was also roughly in line with expectations. Although Blackwell's initial yield is low and the H20 mix rate is high due to inventory clearance due to export control issues, Morgan Stanley believes that overall it is generally in line with the company's guidance, and the profit margin is expected to be roughly consistent with the guidance. As demand for Hopper chips improves and the Blackwell series advances:
"We expect that,Nvidia's data center business will continue to be the main driver of the company's growth over the next five years, especially driven by generative artificial intelligence, Nvidia's GPU solutions will be key to the market. Blackwell's broader listing later in 2025 will further solidify its competitive position for higher dollar value through a larger system sales mix. ”
The report also pointed out that all these point to a strong start to the year, but the potential export control policy will become the biggest uncertainty factor in the company's performance guidance, which may tend to be conservative:
"Although Nvidia's customers may circumvent restrictions by buying products with below-limit performance or training overseas, export controls may be further tightened in the future with the success of AI models such as DeepSeek."
Morgan Stanley said,Nvidia's quarter is a transition quarter, and quarterly revenue is likely to be in line with market expectations, which is around $42 billion, and the company may gradually increase its performance expectations in subsequent quarters. "Once export controls are passed, there will be positive momentum in the second half of the year." Analysts maintained their "overweight" rating on Nvidia and set a price target of $152 per share, about 13% higher than the current share price.
Nvidia's post-earnings volatility
In the last 12 quarters, the options market has overestimated the post-earnings volatility range of NVDA stock 67% of the time when forecasting it. The forecast volatility after the earnings announcement averaged ± 8. 4%, while the actual volatility (absolute value) averaged 7.6%.
Some investors seem to be ready for a huge earthquake. According to data, currently, Nvidia's implied changes are±10.1%, indicating that the options market is betting on its single-day rise and fall after its performance10.1%；。
Backtesting the performance days of the past 12 quarters, Nvidia has a high probability of rising on the day of the results release, about 67%. The average change in the stock price is ± 8. 3%, the largest increase is +24.4%, and the largest decline is-7.6%. Over the past eight quarters, Nvidia has risen and fallen by +14%, +24.4%, +0.1%,-2.5%, +16.4%, +9.3%,-6.4%, +0.5%.
In view of the current Nvidia financial report market, investors who have different expectations for Nvidia's stock price trend can adopt different strategies. Investors who are cautious and bullish in holding shares can adopt the collar strategy, investors who want to go long or short can use the spread strategy, and investors who want to short volatility can use the short-selling wide straddle strategy.
Bull Put Spread Strategy
For investors who don't want to predict the rise and fall of Nvidia, investors can make profits by going long conservatively.
According to the law, investors can use the bull market put spread, and the current price of Nvidia is 130. Investors can bet that after the earnings report, the stock price will rise slightly.
Investors can sell Put with an exercise price of 130 and receive a $640 premium.
In the second step, investors can buy a put option of 125, which costs $425 premium.
Investors are betting that Nvidia stock will rise slightly or stay around 130 after earnings by selling put options at 130 strike and buying put options at 125 strike.
1. Maximum loss:
The largest loss occurs when the price of the underlying asset falls to125 or lessTime. At this time, the put option with a strike price of 130 sold is executed, and the put option with a strike price of 125 bought will also be executed.
Maximum loss calculation: The maximum loss is equal to the strike spread minus the net premium income (i.e., the premium paid by the call option minus the premium gained by the write option).
Maximum loss = (130 − 125) × 100 − (640 − 425) = 500 − 215 = $285
Therefore,Maximum loss of $285, occurs when the stock price falls below 125.
2. Maximum profit:
The maximum profit occurs whenWhen Nvidia Stock Is Above 130, because the put option with a strike price of 130 sold will not be exercised, and the put option with a strike price of 125 bought has no value, investors can keep all premium's income, and the profit is the premium of the put option minus the premium of the put option bought:
Maximum Profit = premium for Sold Put − premium for Buying Put = 640 − 425 = $215
Therefore,Maximum profit of $215, occurs when the stock price is higher than 130.
3. Break-even point:
The break-even point occurs at the price where the net income of the option portfolio is zero, and is calculated as the strike price of the put option sold minus the net premium expense:
Breakeven point = strike price of put option sold-premium net payout = 130-2.15 = $127.85
Therefore,Break-even at $127.85。
Summary:
Maximum loss: $285 (when the stock price falls below 125)
Maximum profit: $215 (when the stock price is above 130)
Break-even point: USD 127.85
Strategy interpretation:
This strategy is suitable for situations where investors expect Nvidia's share price to rise slightly or stay around 130. If the stock price is higher than 130, the investor can make a maximum profit of $215. If the share price drops below 125, it faces a maximum loss of $285.
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