WATCH THIS BEFORE NVIDIA REPORT EARNINGS TOMORROW!!!
In a Nutshell
Nvidia reports earnings tomorrow with expectations of $2.08 EPS and $91.9B revenue. The speaker holds Nvidia long-term but avoids trading earnings, noting the stock sits at a neutral $213 valuation with unattractive risk-reward. Bitcoin and MicroStrategy are overbought—the speaker maintains a small short position in MSTR at $127 average, ready to add on any Bitcoin selloff.
These notes were generated by AI and may contain inaccuracies.
Tomorrow is the big day as Nvidia is set to report earnings. The Nasdaq market ended the day up 0.62%, but from opening to closing, it was slightly a downturn with lower highs and lower lows. This downturn happened shortly after markets opened. A big gap up occurred with a retest of pre-market highs, which was captured in the live trading session. The market got rejected at previous highs and then retested the same support multiple times throughout the day.
During extended hours, Nasdaq sold off and this selling is bleeding into overnight hours. The overnight hours present a lot of volatility due to lower volume, so the market direction for tomorrow remains uncertain.
For markets to remain bullish, they need to hold above 700 on QQQ, the Nasdaq ETF. If QQQ begins to trade below 700, things can get very messy.
Nvidia is set to report earnings tomorrow with market expectations for earnings per share at $2.08 per share and revenue expectation at $91.9 billion. Based on the nine most recent earnings reports, seven ended in the red and two ended in the green. The four most recent ones all ended slightly in the red except for the Q1 report, which ended 4% in the red.
Nvidia is a successful company with a fair value of $260 per share, but currently trades at $213. A series of 58 analysts show a mid-range price target of $305 per share. The overall P/E ratio is 32 times its earnings, which is not the most expensive it has been. The company produces $253 billion in revenue a year and makes $159 billion in net income, leading the AI revolution.
There is some uncertainty about overspending in the semiconductor and AI infrastructure space, and questions about how long this can sustain itself. Nvidia has very healthy margins, so this is not the biggest concern. The speaker is invested in Nvidia long-term, but notes it is not a super good deal at $213. If overall markets begin to sell off, Nvidia will sell off as well.
The speaker does not personally care to trade earnings, especially not with Nvidia, because it can push up or gap down. Nvidia is considered a great long-term investment when there are significant downturns, and this is when the speaker loves to add more to the long-term position. When Nvidia becomes very overbought and overextended, the speaker is not afraid to trim positions.
At $212, based on previous highs of $236 and recent lows of $193, Nvidia is in the middle ground. The speaker does not think it is too attractive and is okay with missing out if it pushes up even higher. The risk-to-reward ratio is not attractive enough, and the speaker personally does not care to trade Nvidia, preferring to hold it long-term.
Bitcoin pushed up to highs of $81,000 and still remains quite elevated, so it is still bullish. It does not make sense to really short it, but the speaker did begin to short it today.
The speaker announced a short position to the LPP team and made $5,396, leaving 700 shares short. The 700 shares are right around $87,000 currently shorting MicroStrategy at an average price of $127. The average price is nothing special based on recent highs, and it can continue to push up higher if Bitcoin continues to rally. The position was reduced to 700 shares because it is overbought, but the speaker is ready to add more once Bitcoin begins to sell off. MicroStrategy will come crashing down when Bitcoin sells off.
The speaker made $376 on Micron and left one lucky share. Micron showed a lot of signs of consolidation for most of the day, and the speaker got fed up and left it alone. MicroStrategy was the main focus because it was so gapped up that the speaker wants to take advantage of the gap down once it happens.
Shorting comes with greater risk. The speaker is choosing to enter early but with a smaller position size. This is the risk the speaker is willing to take, and others should not take the same risk if they are not willing to pay the price of jumping in early. This is not like the crypto bros approach of jumping in because something is going to the moon.
This is an incredibly risky trade and a momentum-based setup with Bitcoin because it is all hype and hype is currently present. If overall markets begin to push up higher, Bitcoin can continue to push up higher, especially as Nvidia is set to report earnings. If Nvidia props up overall markets, Bitcoin may rally with it.
The speaker trades with shares, not options. With 700 shares short, the position can be closed during overnight hours but cannot be opened during overnight hours. This is why the speaker was okay with holding a portion of the short overnight. If there is selling pressure going into overnight hours, the speaker wants to take advantage of it. If it really begins to break out, the speaker will accept it and cut losses relatively quickly. The overall trend is still bullish, but the speaker is okay with jumping in a little bit early with some exposure, but not too much.
The speaker loves shorting companies, but there is no company loved more than MicroStrategy. The speaker trades live every morning with the LPP team. When uncertain about a specific setup or trade, the advice is to never be afraid to stay cash and stay out, especially during volatile times. Beginners should not take risks they cannot accept.
Nvidia is reporting earnings after the markets close tomorrow.
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