Into NVDA
Positioning 7 out of 10…Stock range-bound for ~8 months now as complexity has picked up… near-term market expectations feel relatively in check with feedback suggesting investors somewhat braced for a more modest beat/raise cadence than the ‘normal’ (~$1-2bn beat + a q/q guide up of +$2bn q/q) given the hand-off from Hopper to Blackwell products…. arguably, more focus on commentary into July qtr (timing of Blackwell? China demand?) and broader comments to help settle 2026+ debates. (GS)
NVDA upside risk underpriced?
BofA’s derivatives team weighs in: “Markets seem less prepared than usual for a positive surprise out of NVDA earnings. The stock’s implied move is the lowest since mid/late 2023, which is also the last time calls were as cheap relative to puts as they are today. It’s true that both NVDA and the Semis sector have been mostly flat for 8-9 months. But that may only prove an opportunity to add exposure to what we still think is a major right tail risk for AI stocks“.
Source: BofA
Not seen this in NVDA since 2023
NVDA’s put-call skew into earnings is the steepest since 2023. In plain English, cost of calls has not been this low relative to puts since 2023.
Source: BofA
Flatlining
NVDA and SOX have been pretty much flat over the past 6 months. Chinese tech on the other hand has exploded to the upside. BofA adds some color: “…we still see large right-tail risks in Tech/AI stocks, owing to the combination of strong AI bubble likelihood + large US policy experiment + US/China arms race“. They like playing NVDA earnings with buying short dated NVDA calls.
Source: Refinitiv
Source: BofA
Expect NVDA to be stronger than expected…
“We expect that Nvidia’s earnings report, coming Wednesday after the close of trading, will be stronger than expected, providing a boost to the market. We expect to hear guidance that DeepSeek won’t kill spending on AI infrastructure, including datacenters. Elon Musk’s xAI project utilized 200,000 Nvidia H100 GPUs. The main risk is that Nvidia will announce yet another delay in its highly anticipated Blackwell GPU, which was first announced in March 2024.”
Source: Yardeni
Imagine…
…NVDA starts to feel some of that China AI love spillover effect? Chart shows China “NVDA”, Cambricon, vs NVDA over the past 6 months (in %).
