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Posted February 27, 2025 at 10:15 am
Nvidia shook things up by reporting revenue of $39.3 billion for the quarter while guiding next quarter to $43 billion. This was slightly below the pattern’s prediction for the current quarter’s revenue but slightly above for the guidance. Meanwhile, next quarter’s gross margins are expected to be 71%, falling short of estimates of 72.2%.
This report had something for both bulls and bears, but I don’t think there’s enough surprise to make a real impact. Nothing here is unexpected or significantly outside the predictable range. Additionally, implied volatility, pricing at 155% heading into the results, will dramatically drop tomorrow. Investors betting on significant gains will have calls to unload as premiums decay. So it won’t be surprising at all to see the stock trade down tomorrow.
This stock has been dead money since June 2023, and when stocks post “better than expected” results and can’t rally, it tells you that all the good news has been priced in.
The S&P 500 will likely rally tomorrow as the VIX 1-Day closed around 20. This means there will be a volatility reset when the market opens tomorrow, potentially pushing the S&P 500 index higher—at least initially.
In the meantime, rates continue to fall today, with the 10-year dropping to around 4.25%. Rates have fallen sharply since the CPI report mid-month. Weak retail sales and some weak consumer data are making investors feel like a significant growth slowdown is coming. It is not clear to me that is the case at this point, but I think that by the time we get to the end of next week, we could have a better view of things. The next significant level of support appears to be around 4.18%.
Meanwhile, the dollar appears to be in a falling wedge, which suggests that the next big move for the dollar could be higher. The dollar has also been supported around 106.50, favoring the rising dollar.
At this point, I do not have much to say. I think the next week or so will clarify a lot.
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Originally Posted February 26, 2025 – Nvidia Results Fail To Impress The Market
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Shorting NVDA out of the money call options with two days until expiration to earn the premium was free money. It has yet to have a close above $150. There are still option strikes up to $300(!) because of the run it had last year. $240 would be a $6 Trillion market cap(!!) It will NEVER see $200 in my opinion. I am hoping it bounces though. I am in full-out sell the rallies mode now, this looks like a down year for stocks, if it’s another up year it won’t be too much, but it could fall 10-15% easily. And all those speculative stocks that have ridiculous valuations that went vertical and plunged the past week, they are finished, they are not going back up even close to where they peaked.