Nvidia Stock Expected to Move 5.59% After Earnings Amidst Geopolitical Risks

Nvidia's Q2 earnings are set to be released after market close on Wednesday, August 27. Options traders are betting on a potential 5.59% move in NVDA shares in either direction after the quarterly print. The semiconductor stock has averaged a 4.72% move following earnings over the past four quarters and is up more than 100% versus its year-to-date low. Wall Street analysts remain bullish on the AI chips giant despite its blockbuster performance over the past four months.

Title: Nvidia's Q2 Earnings: Options Traders Anticipate Volatility

Nvidia (NVDA) stock remains in the spotlight ahead of its artificial intelligence (AI) behemoth's fiscal second-quarter earnings scheduled for after market close on Wednesday, August 27. Options traders are betting on a potential 5.59% move in NVDA shares in either direction after the quarterly print. This expected move is based on options with expiry on Friday, August 29 and is calculated based on 85% of the value of the at-the-money straddle [1].

The semiconductor stock has averaged a 4.72% move following earnings over the past four quarters. Heading into its Q2 print, Nvidia stock is up more than 100% versus its year-to-date low set in April. Why Nvidia Stock Could Pull Back After Q2 Earnings Nvidia stock has pulled back following three of its last four earnings events, and the Q2 release today may not be any different, says Tom Sosnoff, the co-founder of Tastytrade. According to him, the semiconductor stock is significantly overvalued and due for a breather heading into the quarterly update. However, there are reasons beyond valuation that could weigh on NVDA shares after the financial release. For one, management could guide cautiously amidst geopolitical risks to its China business, which could disappoint investors and trigger a meaningful selloff in the AI stock after the earnings release [1].

Tom Lee Says ‘Buy’ if NVDA Shares Retreat After Earnings If Nvidia shares do indeed retreat following the quarterly update, long-term investors should treat it as an opportunity to load up on them, says Tom Lee, the head of research at Fundstrat Global. In a recent CNBC interview, Lee said AI remains a strong wind at NVDA’s back, adding it’s “one of the most important companies in the middle of the biggest structural change in the world economy.” According to him, the artificial intelligence trade is still in its early innings only, especially since “there’s such a limited number of stocks that represent a direct play on AI” [1].

Wall Street Remains Bullish on Nvidia Heading into the Q2 Print Despite NVDA shares’ blockbuster performance over the past four months, Wall Street analysts remain bullish as ever on the AI chips giant. The consensus rating on Nvidia stock currently sits at “strong buy” with the mean target of nearly $200 indicating potential upside of another 10% from here [1].

Nvidia is set to release its Q2 FY26 earnings report tomorrow, with analysts anticipating robust financial performance. Key expectations include earnings of $1.01 per share and revenues of $46.05 billion, representing a 49% and 53% year-over-year (YoY) increase, respectively. Analysts have maintained Buy ratings and raised price targets, with one analyst increasing the price target to $215 from $190. Options traders are expecting a 6.68% move in either direction [2].

Nvidia's strong performance is attributed to the continued growth in its Data Center business, which benefits from the increasing adoption of cloud-based solutions and the growing hybrid working trend. The company's AI chips, including the A100, H100, B100, B200, and GB200, are the top choices for building and running powerful AI applications, positioning Nvidia as a leader in the generative AI market [2].

However, Nvidia faces potential headwinds from China export curbs, which could result in an $8 billion hit. The company has reportedly told suppliers to suspend production of its H20 chip due to security concerns raised by Beijing [3]. This move is expected to impact the company's revenue, particularly in its data center business, which has been a primary growth engine.

Analysts remain optimistic about Nvidia's future. UBS analyst Timothy Arcuri recently raised his price target to $205 from $175, citing strong demand signals and projecting another beat in the upcoming Q2 earnings report [2]. Despite the challenges, Nvidia's strong product portfolio and leadership in AI make it a compelling investment opportunity.

References:
[1] https://finance.yahoo.com/news/options-traders-betting-nvidia-stock-173115096.html
[2] https://www.ainvest.com/news/nvidia-q2-earnings-preview-strong-revenue-profit-growth-expected-2508/
[3] https://www.tweaktown.com/news/107313/nvidia-spectrum-xgs-connects-data-centers-in-different-cities-to-create-ai-super-factories/index.html