NVDA Earnings Preview: Nasdaq 100 Vulnerable Ahead of AI Darling Nvidia’s Results

NVDA, Nasdaq 100 Key Points

NVDA has “beat” analyst estimates in seven of the last eight earnings reports, with the stock rising an average of more than 7%.
Options traders expect a +/- 11% move in response to Nvidia’s earnings report, a truly staggering move in a $1.8T stock.
NVDA is seeing its biggest drop of the year so far to trade below its short-term 8-day EMA for the first time in seven weeks

When are Nvidia’s Earnings?

Nvidia reports its Q4 earnings on Wednesday, February 21^st after the market close.

What are Nvidia’s Earnings Expectations

Analysts expect Nvidia to report $4.58 in EPS on $20.6B in revenue.

Nvidia Earnings Preview

One definition of a market darling is “a stock that is often discussed at dinner parties and rarely questioned as a good investment.” By that definition, Nvidia (NVDA) is the quintessential market darling in the current environment.

Positioned at the epicenter of the AI revolution, Nvidia’s stock has quintupled since the start of 2023 as demand for its semiconductors as gone parabolic. Just last week alone, the company saw its market capitalization rise to $1.8T, eclipsing Amazon and Alphabet/Google to become the third most valuable US stock. Now that the rest of the “Magnificent Seven” stocks have reported mostly strong earnings, the big question on traders’ minds is whether Nvidia can continue to deliver exceptional results.

As the graphic below shows, NVDA has “beat” analyst estimates for both earnings (by an average of 14%) and revenues (by an average of 7%) in seven of the last eight earnings reports, with the stock rising an average of more than 7% in response to those results:

Source: Bloomberg

Heading into the week’s release, traders are expecting an even bigger-than-average move, with the implied volatility on options suggesting that we could see a +/- 11% move in response to Nvidia’s earnings report, a truly staggering move in a $1.8T stock.

Beyond the company’s raw results, investors will be particularly keen to see how Nvidia’s CEO Jensen Huang sees demand developing across the rest of the year. Any signs that the AI boom may be slowing could lead to a big bearish reversal in the stock, so traders are justifiably on tenterhooks ahead of the release.

Nvidia Technical Analysis – NVDA Daily Chart

Source: TradingView, StoneX

Technically speaking, NVDA has had an insane start to the year, surging from below $500 on New Year’s Day to an intraday high near $750 last week. As of writing Wednesday morning, NVDA is seeing its biggest drop of the year so far to trade below its short-term 8-day EMA for the first time in seven weeks.

It’s not surprising that some traders may want to take profits ahead of the big earnings report, but the current selling could also be an ominous sign if the results don’t quite meet the high hurdle expected by traders…or if earnings and revenues technically “beat” expectations slightly but the stock fails to see a meaningful rally. After such an impressive rally, even a shallow 38.2% or 50% Fibonacci retracement could take the stock back toward $640 or $610.

Nasdaq 100 Technical Analysis – NDX Daily Chart

Source: TradingView, StoneX

With an elevated 5%+ allocation to NVDA (not to mention the downstream effects of NVDA’s earnings on other semiconductor- and AI-focused names), the Nasdaq 100 may also see a dramatic move in response to this week’s earnings.

Looking at the chart, the Nasdaq 100 is on track to break the bullish trend line off its late-October lows in early trade today, potentially opening the door for a deeper retracement toward the 50-day EMA in the $17K area. At this point, it may take blowout earnings figure from Nvidia to reinvigorate the Nasdaq 100’s fading bullish momentum.

-- Written by Matt Weller, Global Head of Research

Follow Matt on Twitter: @MWellerFX

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.