• The stock is over 40% Year-to-date
• Options point to volatility ahead

Nvidia will report earnings on Wednesday, and investors’ eyeballs will be glued to it for further clues as to what AI’s future offers.

The stock is up over 40% ^[1] year-to-date, while the Nasdaq is up only 6% for the same period.

NVDA’s market cap (MC) has soared to $1.8 trillion, surpassing the MCs of Amazon and Google.

Part of Nvidia’s wild run could be attached to investors’ fear of missing out (FOMO) and chasing the AI wave.

A brief pullback would be healthy to see, as the stock has gone up nearly parabolic in the last weeks.

Nvidia’s stock valuation appears attractive, with a current price-to-earnings (PE) ratio of 35, which is below its median PE of 41 ^[2] and near the lower spectrum of its historical range between 25x and 67x. Potential volatility following earnings reports is expected to position the stock’s PE ratio at a minimum within the 25x to 30x range.

However, the fluctuations in stock prices could be temporary, leading up to Nvidia’s premier GPU Technology Conference (GTC), happening from March 18th to 21st, where key announcements regarding pipeline projects and collaborations are expected. Historically, following the last six yearly GTC events, NVDA stock has seen an average increase of 6% the day after, compared to a 1% rise in the SPX.

All in all, Nvidia should remain the dominant AI force as its competitive moat will enable it to remain head and shoulders above the competition, allowing it to grab a large chunk of the AI’s total addressable market (TAM).

As a result, Nvidia’s top line has been growing and growing; experts predict that annual revenues will reach $110 billion by 2026, as per estimates gathered by FactSet, a 4x increase from 2023 where revenue was $27 billion as it positions to be the key AI chip player.

Source: Factset

Market options imply a +/- 11% move for Nvidia after the earnings print.

Nvidia has consistently exceeded analysts’ expectations for revenue in the last 10 quarters and outperformed profit predictions in nine of those periods. Following these earnings reports, its shares have surged in value seven times during the subsequent trading day.

Investors can long Nvidia using our 2x NVIDIA, 3x NVIDIA.

Alternatively, investors can short Nvidia using our -1x NVIDIA, -3x NVIDIA.

1. Tradingview.com
2. Koyfin.com