Nvidia reported a blowout quarter, beating on earnings and revenue estimates. The Daily Breakdown digs into the results — and implications.
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What’s Happening?
Markets gyrated on Wednesday, rallying early before fading as investors awaited Nvidia’s earnings. Uncertainty has grown in recent weeks, with talk of an AI bubble gaining traction. Investors are hoping Nvidia’s report will help ease those concerns. Let’s dive in.
Nvidia
Earnings of $1.30 per share topped estimates of $1.26, while revenue of $57 billion beat expectations of $55.2 billion. CEO Jensen Huang noted that sales of the company’s Blackwell chips, the firm’s latest flagship chip, are “off the charts,” and that “cloud GPUs are sold out.” While most of Nvidia’s segments performed well, data center revenue — its key AI driver — was robust, coming in at $52.1 billion, surpassing expectations of $49.3 billion.
Perhaps most importantly, guidance impressed. Nvidia projected $65 billion in Q4 revenue, above estimates of $62 billion, and also forecast stronger-than-expected gross margins. That combination shows robust demand and pricing power remain firmly intact.
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The Setup — Nvidia
In early October, we discussed Nvidia finding resistance in the low-$180s. After its run to record highs and amid the ensuing pullback, NVDA has now found support around $180. When prior resistance turns to current support, it’s generally a bullish observation — and now earnings confirm that support area…provided today’s rally doesn’t completely fizzle out.
From here, bulls want to see Nvidia regain the $200 level, which could put the recent highs back in play. If Nvidia were to move back to all-time highs, it could help give the overall markets a boost and give a lift to AI stocks. Should the rally be short-lived, investors will want to see the $180 area continue to hold as support.
Options
As of November 19th, the options with the highest open interest for NVDA stock — meaning the contracts with the largest open positions in the options market — were in this week’s expiration, specifically the $200 calls and $180 calls, which captured yesterday’s earnings report. The highest open interest measure outside of this week were the January $200 calls.
Investors who are bullish could consider calls or call spreads as one way to speculate on further upside, while bearish investors could consider puts or put spreads to speculate on a further move to the downside. For options traders, it may be advantageous to have adequate time until the option’s expiration.
To learn more about options, consider visiting the eToro Academy.
What Wall Street’s Watching
WMT
Walmart beat on earnings and revenue expectations, while giving a slight boost to its full-year earnings and revenue outlook. The good news? US shoppers are still spending. The bad news? Management noted that low-income consumers are under pressure, while Walmart is gaining share in high-income shoppers. That shows that while consumers are spending, they’re still under pressure. Check out the chart for WMT.
EXAS
Shares of Exact Sciences are on fire, rising more than 20% yesterday and now up more than 15% in pre-market trading today on news that Abbott Labs will acquire the firm for $105 per share. Even after yesterday’s rally, shares closed at “just” $86.18. The all-cash deal is worth more than $20 billion. Get to know ABT and dig into its financials.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.
