Nvidia is about to release its earnings report, bearish but not shorting
Non-investment advice, viewers, just take a look.
I believe the most important thing in stock trading is trading expectations, and among those expectations, the most crucial is the expectation of performance growth.
Goldman Sachs made a prediction in October, estimating the capital of several major giants including Microsoft, Google, Meta, and Amazon (all major clients of Nvidia).
Growth of 64% in 2024 (USD 219 billion)
Growth of 15% in 2025 (USD 252 billion)
At the end of October and the beginning of November, several major giants announced their financial reports, and capital expenditures were slightly adjusted upward.
For example, Meta's Mark Zuckerberg said that AI has significantly boosted the advertising business, and the company will increase its investment in AI, expecting a substantial increase in capital expenditures in 2025.
However, the capital expenditures of several giants in 2025 will definitely not see the same crazy growth as in 2024, as AI anxiety has decreased significantly.
Regarding valuation:
The net profits for the previous few quarters were 122.8, 148.8, 166, and 174 (estimated, calculated based on around 90% growth), totaling 61.1 billion (I initially expected over 50 billion at the beginning of the year, it seems I was still conservative). Currently, with a market value of 3.6 trillion, the price-to-earnings ratio is around 59 times. If we calculate based on a profit growth of 50% next year, a 30 times price-to-earnings ratio seems relatively reasonable (Apple and Microsoft currently have valuations of 37 and 34, respectively, making Nvidia appear cheaper).
What is currently most concerning is the production and the shipping time of new chips. Reports are somewhat contradictory:
~ Morgan Stanley's senior semiconductor analyst Joseph Moore stated in a research report on November 18 that from the perspective of the Asian supply chain, the production of Blackwell B200 has become more stable, with an expected production of about 300,000 units in the fourth quarter of 2024 and 800,000 units in the first quarter of 2025.
~ Since the launch of the Blackwell chip series in March this year, delivery times have been repeatedly delayed. From the initial expectation of the second quarter of this year to the fourth quarter as estimated by CEO Jensen Huang, and now media estimates suggest that the improved Blackwell GPU may not ship until the end of January next year at the earliest.
Nvidia has passed its peak profit-making period, and the stock price should experience fluctuations in the next couple of years, but overall it is expected to rise slowly (if the market doesn't have major issues). It remains a good long-term target, as its performance growth rate is more attractive compared to Apple and Microsoft.
The market has very high expectations for Nvidia, and if it doesn't exceed expectations significantly, the stock price will drop.
Based on this situation, and the slowdown in capital expenditure growth of major clients, I personally lean towards a bearish view on this financial report, worrying that the slowdown in performance growth may lead to concentrated emotional releases, which was already reflected in the last financial report Currently, the positions are in other accounts, and I have already reduced most of them.
Although, I also hope that I am wrong in my predictions.
For long-term friends, I suggest not to look at this earnings report, as short-term fluctuations are not important.
Again, I emphasize that the above is not investment advice, and do not heavily bet on earnings reports with options... As long as the green mountains remain, one need not worry about firewood. $NVIDIA(NVDA.US)
Previous reviews of several articles about NVIDIA:
NVIDIA's earnings report is coming, how to play options? (Popular Science) (8.28)
NVIDIA's earnings report tomorrow, bullish or bearish? (8.28)
After the world's peak, how will NVIDIA proceed? Short-term, medium-term, long-term (6.21)
NVIDIA's earnings report preview: continue to be bullish (not investment advice) (5.22)
View on NVIDIA's earnings report preview: continue to be bullish (2.21) **
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