Earnings Snacks: Nvidia fluctuates, how do you see it?

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The company’s quarterly report — the most anticipated part of the tech industry’s earnings season — met or beat analysts’ estimates on nearly every measure. But Nvidia investors have grown accustomed to blowout quarters, and the latest numbers didn’t qualify. Moreover, Nvidia’s next big cash cow — the new Blackwell processor lineup — has proven more challenging to manufacture than anticipated.

Nvidia reported earnings which showed the company's earnings and revenue grew more than 100% from the previous year. But it also marked the company's slowest year-over-year revenue growth, 122%, and the rate of growth compared to the previous year was less than half what Nvidia reported in the first two quarters of 2024.

Morgan Stanley divides the semiconductor cycle into: early stage of rebound -> rising stage -> euphoria stage -> surrender stage. It has now shifted from the "optimism" stage to the "euphoria" stage. In this stage, the risk-return ratio becomes unattractive.

Based on year-on-year sales/price growth forecasts for global revenue, the “true” peak is approaching: current consensus forecasts show that global semiconductor revenue will peak in the third quarter of 2024. Earnings will continue in 2025, but the market may have already priced in these expectations, resulting in future returns that may be lower than expected.

The semiconductor industry has obvious cyclicality. Generally speaking, the high-speed growth cycle of revenue can be maintained for 2-3 years, and then enter a bottleneck period. After the high-speed growth of 125.85% in the fiscal year 2024, the fiscal year 2025 is already the second year of high-speed growth in performance. If the downstream order demand is saturated, then the growth of NVIDIA in the fiscal year 2026 and later is expected to slow down significantly.

Assuming that investors already hold NVIDIA's stocks, considering that it is difficult for NVIDIA's stock price to rise in the short term, they can consider selling high-priced call options to earn the premium. Assuming that investors do not hold NVIDIA's stocks, they can consider buying after the stock price adjusts, and below $100 is a relatively reasonable price.

Reasons for the decline: Concerns about a hard landing in economic data, Bank of Japan hinting at rate hikes, Seasonal sell-off.

As smart investors, how should we respond to this situation? Consider allocating to U.S. Treasury ETFs or defensive stock ETFs, Inverse ETFs.

If you are bullish on Nvidia's future, here are some safer strategies to help you:
1. Pyramid trading strategy: buying stocks in tranches
2.Cash secured put: acquiring stock at a lower price

What are your opinions on Nvidia's earnings results? Feel free to comment below and let mooers know your ideas!