8/28 Daily Plan: NVDA Announces $50B Buyback - Will it be enough for Analyst Upgrades?

Hey Everyone -

NVDA produced a very good earnings report this evening and its guidance also beat estimates with the company looking at $32.5B this coming quarter vs. $31.7B expected by analysts.

The stock had rallied 30-40% from its August lows, and it faced an extremely high bar heading into this quarter’s earnings outcome. Gross margins did come down to 75.1% form 78.4% in the prior period, and I suspect that is causing the knee-jerk reaction in the stock after hours.

Wall Street DCF models are extremely sensitive to margin expectations, but I do believe NVDA’s large $50B Buyback Announcement will come in to support the stock in the coming sessions.

I’m still combing through the data from their earnings release, and though the market reaction is quite negative after-hours, I think NVDA may get analyst upgrades based on their recent quarter’s performance.

We talked about the options market positioning yesterday and it looks like the 130 Strike Calls will have a tough time tomorrow.

At the same time, I wouldn’t be surprised if market-makers lift NVDA above the highest Put Options Interest strike of 120 and deals theta decay for both calls and puts tomorrow.

Technology in general has struggled over the past several sessions, but fundamentally speaking, it’s difficult to make the case that NVDA’s best days (along with the semiconductor sector) are behind it.

I’ll continue to be on watch for active opportunities - I think the tech bounce from early August is facing a roadblock but it’s not yet fully concluded.