Nvidia Stock Faces First Earnings Since Jensen Huang’s Ouster as Options Signal a Big Move

Nvidia (NASDAQ:NVDA) stock has been highly volatile in recent days as investors come to terms with Jensen Huang’s exit. After peaking at $243 in October, it fell more than 38% to a low of $148. The stock will face a test when the company reports its first earnings after his departure on Tuesday.

Nvidia to Publish First Earnings After Jensen Huang Ouster

Nvidia, the world’s biggest semiconductor company, will be in the spotlight again this week as interim CEO Colette Kress oversees the first earnings report since Jensen Huang’s exit.

These results are expected to show that the company’s revenue continued growing in the third quarter. Benzinga data shows that analysts expect the revenue to come in at $108.7 billion, up by 90% from a year earlier. 

Earnings per share (EPS) are expected to come in at $2.47, well above the $1.30 the company earned a year ago. Gross margin is also expected to remain above 74%. Nvidia tends to report results that beat analysts’ estimates.

The results will be watched closely because of the company’s Chinese business. In its recent earnings reports, the company has said that China accounted for 0% of its sales. However, Culper Research, which warned about Jensen Huang’s relationship with Alice Huang, estimates that illegal sales to China made up 20% of Nvidia’s total revenue.

Options Market Points to Volatility as Analysts Slash Forecasts

Top Wall Street analysts have slashed their outlook for the stock amid the ongoing crisis. Rosenblatt Securities reduced the target from $390 to $300, while HSBC downgraded its rating from buy to hold. 

Barclays analysts slashed the target from $275 to $210, while Stifel Nicolaus dropped it from $310 to $205. Bernstein was more aggressive as it cut the target from $400 to $200. 

Most of these analysts worry that the Chinese business may impact the company. They also expect the company to face more regulatory challenges in the near term.

The options market suggests that the stock will be highly volatile this week. The company has an implied volatility of 60%, higher than the historical volatility of 45%. Most of the calls are concentrated at $170. The volume of call options above that level is also significant, a sign that investors expect the stock to rebound. 

Nvidia Stock Technical Analysis

On the charts, Nvidia shares have been in a strong sell-off in the past few months. It has dropped from $243 in October to a low of $148 last week. It then attempted to bounce back and now remains at $162. 

The stock has remained below all moving averages and the Supertrend indicator. Therefore, while a rebound is possible, there is a likelihood that the stock will resume the downward trend after earnings.

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