Nvidia Earnings Preview: The Last Most Important Event Of 2024

Once again we have reached the most important day of the earnings season: according to Barclays strategists, today's results from Nvidia, the world's largest company, will be the most important catalyst left this year, more than the Federal Reserve’s December meeting, which - now that the elections are over - makes today's earnings report the most important remaining event of 2024.

And the market is ready: NVDA's earnings report has been a key driver of volatility for the S&P 500 and other major ETFs over the past two years. According to Goldman, option pricing suggests that investors expect this NVDA earnings day to be very significant, with the NVDA 22-Nov straddles implying a +/- 8.3% move over the next three days, while NVDA has averaged a move of +/-9.3% on its past 8 earnings days. SMH and SPY options are pricing modestly higher than normal straddle prices.

Before we dig deeper, here is what Wall Street expects from NVDA when it reports results 20 minutes after the close:

Logistics

• Numbers typically hit ~420pm with the conference call at 5pm (forward guidance given in the PR).
• Options pricing in a 8+% move (see below).
• Stock has traded flat/higher on 5 of last 7 prints, though last quarter, stock sold off ~6% on mixed GM / OpEx + the ‘peak’ debate.

Median analyst estimates:

• Q3 Revenue $33.25BN, up almost double from $18.12BN a year ago (the company has beat on revenue on 8 of the past 8 reports); buyside whisper is $34.6BN, and $2BN ahead of guidance.
• Q3 EPS $0.721, up double from $0.37 a year ago (the company has beat on EPS on 7 of the past 8 quarters).
• Q3 EBITDA $22.14BN, up double from $11.02BN a year ago (the company has beat on EBITDA on 7 of the past 8 quarters).

Visually:

Sentiment:

Expectations are extremely high into the Blackwell launch, with CSP customer commentary still very bullish and GPU supply a growth constraint. Hopper (especially H200) shipments also remain strong – and likely will do so into next year. Investors are starting to develop a more nuanced view on lumpiness around the Blackwell launch, but FY26 expectations have become quite ebullient (see below) a worry that comes up increasingly in conversations. For these two reasons Jensen’s commentary on the call will be particularly important to level-set expectations (or not).

Other concerns weighting on investors (and where commentary will be helpful) include i) Blackwell GMs at the start of the ramp (and how to think about non-GPU revenue), ii)“competition” from custom ASIC, and iii) concerns about models peaking. 

According to JPM TMT specialist Joshyua Meyers, NVDA has been the key topic on everyone's mind in the past week. The JPM trader says that "big-picture, a nice beat seems widely anticipated today, with expectations for the guide starting at $38b and going up a bit from there." 

Goldman Sachs Semiconductor analyst Toshiya Hari expects the company to beat 3Q street expectations (FactSet) driven by strong double-digit Data Center revenue growth. He expects FY1Q (April) to be the true 'break out' quarter in which the ramp of Blackwell coupled with improved supply-side conditions drives meaningful positive EPS revisions.

As for Goldman, the bank is also euphoria into earnings, noting that "NVDA is trading well below its past 3-year median P/E multiple relative to our broader coverage" and adds that "investor sentiment skews more positive into results on Nov 20th (desk thinks sentiment = 9 out of 10, up from last qtr) with investors focused on the upcoming Blackwell product ramp as well as broader commentary around visibility and ROIs / use-cases for GenAI (think: Agents / Assistants, robotaxis, etc).” The bank also notes that NVDA is "set up well to sustain its outperformance; demand for Compute remains strong; AI use cases more visible; cloud capex expectations went up again; supply chain datapoints indicative of sustained sequential growth."

Key near-term bogey seem to be:

1. The margin guide (with a few saying JPM's 73.8% buyside bar is too high),
2. The possibility of hiccups in the Blackwell ramp which - given the steep ramp - could push revenues to the April quarter;
3. Any guidance on F26 and beyond.

Goldman TMT specialist expectations:

According to Goldmans Peter Bartlett, investors are looking for a steady beat on the Oct quarter vs guidance of ~$32.5bn in revenue (NVDA has beat it’s guidance by ~$2bn the last several quarters) and a January quarter guidance above the street ($37.1bn) – with some debate on ‘what’s good enough’ given moving parts with Blackwell contribution.

JPM buyside conversations:

Meyers writes that unlike last quarter, his survey expectations for the Q are more in-line with consensus (F3Q Rev $34.5b v. consensus $34.6b – still $2b ahead of the guide – and EPS of $0.79 v. consensus $0.74), but once again expectations for the out-Q are well ahead (F4Q Rev Guide $38.8b v. consensus $36.6b), which is a particular worry given that so much of the upside hinges on Blackwell shipments in an extremely steep ramp (i.e. huge volatility of outcomes).

In terms of next year, the JPM survey reveals expectation of an eye-popping $210b in revenue, and (just from discussions) $5 seems to be the consensus EPS.

Overall, the JPM trader observers that folks seem more relaxed (with a few noting "how unusually relaxed folks here in Asia are ahead of the print"), a few underscoring that with such a steep ramp through 2025, any weakness probably gets bough, and besides, "what else can you own?" (i.e. peers ain’t that much cheaper).

Longer-term, Meyers is increasingly hearing F26 revenue of >$200b+, and a path to $5 EPS.

The JPM trader next look at the geopolitical context and notes that investors in Asia seem more focused on the US and Taiwan, and are adding US resources; but a number have also underscored an expectation that Chinese tech companies may get increasing support in the face of escalating trade frictions:

"Broadly folks are still focused on AI, with a view that nothing interesting is happening in cyclical tech sectors. Sentiment on Taiwan felt pretty good, Korea much less so (even with - or maybe because of - Samsung's capital return plans). Folks broadly still sounded nervous on memory, with even those structurally bullish on the sector feeling like there's no need to be overweight here. But on AI, scaling concerns didn't seem to be front-of-mind to the extent they've been in NY over the past week. A few folks asked whether perhaps an expected China export ban on WFE is the clearing event for that still-hated sector."

Comps and Context

• Chatter was that Korean corporate attendees sound committed to improving value up strategies and KPIs, and we could get more moves here soon. But where Samsung Electronics is concerned, it didn't feel like their buyback announcement was viewed as thesis-changing (particularly given reports of a Lee family margin call risk). The focus on that name remains on execution, where missed promises were cited as a frustration. By contrast, in nearly every conversation, TSM came up as a top pick.
• Hon Hai's Ai server business continues to do well, and the company also refuted NVL72 overheating issues alleged by The Information, saying they're based on “very old information,” and “the media mixed it without mentioning actual date.” They said this is an issue from two quarters earlier, and that NVL72s are in their factories now and ready for shipment; so they’re on an unchanged schedule. They’re going to ship in December after testing, so schedule remains unchanged.

On the subject of AI server, sentiment has turned on Aurusin the wake of SMCI's troubles, and it's now a show-me, awaiting proof it can diversify. In liquid cooling, a sense also lingers that VRT and other global cooling plays are in trouble from a growing Asia supply chain… this very much in opposition to what JPM Industrials Analyst Steve Tusa and Industrial Spec Paige Hanson heard at our recent Datacenter Infra Day in Miami.

Market Positioning and Reactions

According to Goldman, NVDA's Positioning score (1 = max short/UW, 10 = max long/OW) is near the top:

• 9/10 (this is perhaps the most consensus long position on the street, there is no room for disappointment).

The framework according to Goldman, is as follows:

• 30% Technical: SOX forming a head and Shoulder. NVDA MOMO stalled.
• 30% Flows: RM have been buying from the 600 level. Fully long. HF more concerned.
• 20% Positioning: 9 out of 10 long
• 10% Valuation: not expensive vs history
• 10% Sentiment: more muted but still well regarded as the AI stock

The options implied Move is a whopping 8.8%. GS writes that NVDA options have been very active accounting for 15% of all single stock options volumes over the past month; while this is below volumes ahead of the August quarter, it remains one of the top stocks by dollar options volume. Both volumes and skew suggest investors are more bullishly positioned in NVDA than the S&P 500, but this bullish positioning is more modest than seen ahead of Feb or May 2024.

Set-Up

Shares of NVDA are up ~25% since the July quarter print and the stock is on the door-step of ATHs (~$149.77). The Goldman desk has positioning as a 9 out of 10 – long, but not a max long – with signs of profit taking in recent months.

• Bulls likely playing for a ‘break-out’ trade on an expected beat/raise (with downside arguably cushioned by the upcoming Blackwell launch)
• Bears playing for a reset in the stock driven by a growing list of moving parts (Blackwell noise, scaling laws, custom ASICs/silicon, ROICs, etc) vs valuation back at ~15-mo highs.

Reaction Matrix

According to Goldman's Paolo Schiavone, the buyside believes the company forward guidance. Those that have bough into forwards guidance have been rewarded so far. However, the trader warns that the risk is that the market is complacent on AI, and adds that the debate tonight is whether the excited about first Q of Blackwell offsets the capex concerns

As a result, risk is about probability + severity of an outcome: "The stock has travelled well, and this print is a risk. This could be a healthy correction."

Here is the probability matrix into the NVDA print.

Expectations for 1Q even higher than 42bn, as high as 46-47bn.

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Finally, Goldman analyst John Marshall highlights top 20 ETFs that have historically made large moves on NVDA earnings.

Finally, to get a sense of the unprecedented euphoria surrounding the AI bubble and the world's largest company, here is CEO Jensen Huang signing a tit.