Nvidia (NVDA) earnings / prospect

Hey folks!

I’m looking at NVidia as they are going to release the results on Tuesday evening and I’m wondering what are other people views and expectations.

On the positive side, NVidia dominates the GPU/AI accelerator market and I cannot see another company rivalling that in any way in the next 6-12 months. The current price is $492 and several analysts put the target price at $650 in the next 12 months. The worst estimate is at $475 (slightly below the current price). And I know their order book is full for the next few months (many companies complain that they cannot secure high end cards).

On the not so positive: the SP has risen at at a meteoric rate (well done anyone who has invested on it!) and there’s no clear ceiling at which the SP will bounce. Other companies are investing heavility in their own inference chips to cut the reliance on NVidia; and I’m not sure how the relationship between the US and China affects the delivery.

I’m wondering what is the opinion of other people. Do you think the SP will rise after the earnings? or drop? and finally why?

It is going to be very difficult to know what’s going to happen with Nvidia but it is fairly safe to say that the results should very strong. They were last time but the price dropped back but personally when it retraced to 400 I saw that as a massive buy opportunity and thus loaded up.

500 is a key level so it isn’t surprising that a company (even with the strength of Nvidia) will take a couple of attempts to break it. The big question at the moment is whether it will break it this week (convincingly) or take a third run at it (perhaps with a small retracement).

Nobody knows how good the results will be. Nvidia’s price is hugely dependant on future projections.

I have heard a couple of market insiders saying that many investment funds are underweight on Nvidia and other companies and haven’t had great performance during the year so may do heavy buying in the remainder of 2023 to adjust their positions for the year end so that people see companies like Nvidia in their portfolios in the published year end information. I put some cautious on this but the market seems to have softened up many private investors into worrying that the price could retrace like last time. The significant recent rise in MSFT, INTC etc says that the market could (emphasis on could) push the share price to new all time highs. This would fit with funds getting their portfolios ready for year end.

Again my personal view is that the results will be very good. In the prior quarter (to June) many companies had not even made AI related decisions and certainly hadn’t progressed their AI plans or developments. This quarter (to Sept) that will have started to change. Also consider Tesla who are buying 10,000 Nvidia processors for the FSD neural-net training. After the last results the market got distracted by the impact of US restrictions on exports to China. Nvidia has already announced two chips to get around the latest restrictions and said that the restrictions will not have a significant impact. Nvidia has also announced a whole new development strategy to use ARM cores and to very significantly broaden its target markets. Another thing that has changed in this quarter (compared to early 2023) is the number and magnitude of different LLM plans and models. You have the massive LLM but many companies are announcing small LLM and plans for local/private/personal LLM. Some of those aren’t well serviced by current silicon products so there is likely to be a rapid rate of development in AI related silicon and it seems fairly certain Nvidia will be at the heart of that. Thus I have NO idea what price target to put on Nvidia but I am absolutely convinced (but wdik) that it isn’t a bubble.

So this is a rather long rambling answer to say I really don’t know what to expect from this week but for me its rather irrelevant because I will simply use any dip to buy more and as a trading opportunity. I do think that there is a good likelihood of volatility because some will sell expecting a dip like last time but many will be expecting that (or perhaps planning on it) and so if there are institutional investors wanting to increase their positions they may be hoping for people to sell and for there to be volatility.

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Looking at the Options order book there is large Call volume at 495 and 500 so clearly a lot of people have bet on the price getting well above 500. If they have bought a 500 Call they will have paid for it so effectively need to get over 505 or 510 (if they bought when the price was a lot lower) to make any profit. The current price of the 500 Call to buy is 16.45 meaning the price has to exceed 516.45 THIS WEEK to breakeven.

What’s also interesting is that there is a huge open interest for the 19th Jan Options.

Attached are the 24November Options with some significant strike prices highlighted. There is significant volume for the 450 Put Options expiring on Friday. However, that may be people selling 450 Puts on the basis that they do not think that it will drop (at all or at least nowhere near 450).

Edit: the order book for the 24th Nov is going to be a complete mix. For example I sold 400 Puts with the 17th Nov expiry when the price was about 400 so got a decent amount for selling them and they expired worthless meaning I kept all of the money as profit.

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Thanks a lot WakeMeUp! I’ve opened a very small position and let ir run after the earnings. :crossed_fingers:

I’m a bit scared of shares with a SP in the hundreds of dollars :slight_smile: .

I don’t know what your investment or trading strategy is. Be prepared for some volatility. The only thing that I think is unlikely is the price being flat. However, long term I think there is exceptional growth but be prepared for dips and volatility along the way (but wdik…)