Decoding NVDA Earnings: What to Expect on Wednesday

22-02-2023

As the financial world gears up for another earnings season, tech enthusiasts and investors are eagerly awaiting the earnings report from NVIDIA Corporation (NVDA), one of the leading players in the semiconductor industry. Scheduled for Wednesday after the closing bell, this event offers a deep dive into the company’s performance, providing insights into its financial health and market trends. But what makes the earnings report such a significant event? How does it impact you as an investor? Is there a reason for the market’s palpable excitement? Questions like these often arise as the earnings announcement approaches.

As an investor earnings offer a catalyst for potential for price movement, with earnings reports often leading to significant price movements in a company’s stock. If the company’s earnings surpass expectations, the stock price may rise, potentially leading to short-term gains for investors who bought before the announcement.

Last quarter Nvidia’s shareholders witnessed better-than-expected results with strong sales and quarterly sales guidance of $11.1 billion well above Wall Street’s $7.1 billion estimates which caused shares to surge 54%, lifting Nvidia’s year-to-date return to 221%. These types of returns offer option traders even more opportunity to take advantage of leverage buy buying out the money calls to further increase their buying power going into these events.

The buzz around the AI sector, has pushed NVDA 33% higher than when it last reported. The stock price has also been buoyed by a recent upgrade from HSBC Frank Lee, who has raised the firm’s price target on Nvidia to $780 from $600 and kept a Buy rating on the shares.

Technical Analysis

Having a stellar year; NVDA stock has rallied from its 4/01/23 low trade of $140.34 to an all-time high of $480 creating an impressive 242.65% gain.

The question on many traders’ minds is it time for a pull back or is this momentum, coming into earnings, going to continue as it approaches its all-time highs in pre-market trading.

Looking at the daily chart we are approaching again the all-time highs, current pre-market indication $476.95 after gapping higher on Monday’s trade and retaking the 20-day EMA confirming that this trend is well intact.

Bullish Points

• Price above all EMAs 20, 50, 200
• Momentum not yet in overbought territory
• The gap higher on the previous trading day
• Closed Monday at the highs

Bearish Point

• Trading at resistance may fail at these levels
• Extended valuations

Resistance

$480

Channel resistance comes in @ 540

Support

$400

$367

$320

History doesn’t always repeat itself, but it does often rhyme and with the myriad of positive indicators going into the upcoming earnings report buying calls on NVDA could be a great way to capitalise on this event.

Alternatively, you could just buy the 460 call and not cap the trade at 520 but this would increase your cost to $3,200