Chips, China & Clear Guidance: What NVDA Needs to Surge After Earnings

Core Viewpoint - Nvidia's earnings report is anticipated to be a significant event for the tech sector and the S&P 500, with expectations of strong performance metrics including $65 billion in revenue, a 65% operating margin, and 65% year-over-year growth [4][5]. Company Insights - Nvidia is currently trading up 1.5%, while competitors like Broadcom are up 2%, and AMD and Intel are down by similar percentages, indicating a mixed market response [2]. - Analysts expect Nvidia to report better-than-expected numbers, which could serve as a wake-up call for the tech trade, particularly in AI technology [4][5]. - The company is expected to provide convincing guidance regarding GPU commitments and capital expenditures, especially in light of concerns about the data center spending cycle peaking [6][7]. Market Context - Nvidia's stock has been relatively stagnant over the past four months, but there is optimism that the upcoming earnings report could catalyze a breakout from this sideways trading pattern [10][11]. - The stock is currently viewed as undervalued, trading at 29 times earnings while growing at twice the rate, suggesting a potential opportunity for investors [9][10]. Trading Strategy - The options market is pricing in a potential move of over $11 in either direction post-earnings, indicating expected volatility [15][16]. - A bullish options strategy involving a $20 wide call vertical is suggested, allowing for upside exposure with a manageable risk of $760 per spread [17][18].