Nvidia Earnings Preview: Expect a ±10% Stock Price Movement
NVIDIA $NVIDIA Corp(NVDA)$ will report quarterly earnings after the market closes on August 28.
In other words, Nvidia is set to report earnings at 5 AM on August 29 (Thursday) Singapore Time.
Nvidia's stock closed at $128.30 last night, which is 5.37% lower than its all-time high of $129.20.
The options-implied volatility indicates that Nvidia has an expected price move of ±9.81%, suggesting that the stock may break another all-time high if earnings surprise.
Nvidia is Expected to Meet Earnings Estimates, but All Eyes Should Be on Earnings Guidance
Nvidia has beaten earnings expectations for the past six consecutive quarters. The average 1-day stock price movement after earnings results is 10.28%.
Therefore, I expect a +10% movement if earnings beat expectations. The options-implied volatility suggests a ±9.81% stock movement.
However, if earnings miss expectations, investors should also expect a -10% stock movement.
Revenue is expected to increase by 113.64% YoY according to Bloomberg Consensus, which is merely 3 percentage points higher than Nvidia’s own estimate. Thus, the actual earnings result seem likely to beat Bloomberg Consensus.
Bloomberg Consensus estimates a Gross Profit Margin of 75.46%, higher than Nvidia’s own estimate of 74.8%.
Data Center revenue is expected to grow 143% YoY and 11% QoQ.
In comparison, AMD’s $Advanced Micro Devices(AMD)$ Data Center revenue increased by 115% YoY and 21% QoQ. If Nvidia does not deliver higher than 21% QoQ growth, it may imply that AMD is capturing some of the AI chip market share this quarter.
Earnings expectations for the next quarter (Q3 2025) show a revenue of $31.854B and EPS of $7.13. Many big tech companies have missed their earnings guidance during announcements, and Nvidia’s stock may suffer a selloff if earnings guidance misses expectations.
Analysts currently expect a potential four- to six-week delay of the Blackwell B200 GPU, instead of the more than 3-month delay reported by some media outlets. Should Nvidia announce a delay of more than 6 weeks for the Blackwell B200 GPU and push back some of the future rollouts, Nvidia's stock could suffer a selloff.
Nvidia has a short interest of $36B according to MarketBeat, compared to an all-time high of $42B. I see a potential short squeeze if earnings beat expectations.
Source: Bloomberg, Tiger Brokers, 28 Aug
Conclusion:
I remain long-term constructive on Nvidia and view any delay in Nvidia’s AI chips as merely a delay in Nvidia’s bull run.
Any delay in Blackwell revenue should be complemented by higher Hopper sales.
The current Bloomberg Analysts' Consensus 12-month Target Price for Nvidia is $145.17, representing an upside potential of 13.14% relative to yesterday's closing price of $128.30.
Source: Bloomberg, 28 Aug 2024
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