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Posted August 27, 2025 at 12:45 pm
I hate repeating a cliché, but it remains quite fair to say that Nvidia’s (NVDA) earnings are the single most important report in any given quarter. The current bull market has been largely powered by the promise of artificial intelligence, and no single company is more critical to that enthusiasm than NVDA. As a result, it has garnered the top ranking in key market-capitalization weighted indices, meaning that as NVDA goes, so must those indices to some extent. Throw in the fact that the timing of NVDA’s fiscal year means that it doesn’t need to share the spotlight with other corporate behemoths, and we have no choice other than to focus closely on this company’s results.
The key will be in the guidance. If NVDA can assure investors that AI-related spending will continue apace, then the rally should remain intact. If not, that could offer tremors through the entire tech sector. Bearing in mind that NVDA’s largest customers include other key megacap tech stocks like Microsoft (MSFT), Meta Platforms (META), Alphabet (GOOG, GOOGL), and Amazon (AMZN), concerns about NVDA’s growth pace could spill over to other key index components.
It is also important to bear in mind that NVDA is up nearly 35% since its last earnings release. That is a phenomenal advance, to say the least. Yet despite the well-deserved scrutiny surrounding each NVDA earnings report, the last three results were not immediate catalysts for major moves:
NVDA 1-Year Daily Candles with Arrows Pointing to the Days Following Prior Earnings Reports (November 20, 2024; February 26, 2025; May 28, 2025)
The stock barely budged (+0.53%) after its November 2024 report, and the stock stayed in a wide trading range for the next few months. The stock fell sharply (-8.48%) after the February 2025 report, but the declines that followed were more the result of the tariff-related selloff than anything NVDA-specific. The most recent report led to a +3.25% gain, but the stock traded only modestly higher for several days before breaking out to new highs.
One might think that the recent rapid ascent could leave NVDA susceptible to concerns about negative interpretations of the upcoming guidance. In short, the options market doesn’t seem particularly perturbed. Options expiring this Friday show a rather symmetrical probability distribution with a peak around the current stock price:
IBKR Probability Lab for NVDA Options Expiring August 29th, 2025
Source: Interactive Brokers
Skews show a reasonable, but hardly abnormal amount of risk aversion. Asymmetry to the downside is clearly visible, but the shapes of the skew curves were relatively typical for key stocks ahead of earnings events. It is only recently that flat or “W-shaped” skews have become common for megacap tech stocks:
Skews for NVDA Options Expiring August 29th (top), September 5th (middle), September 19th (bottom)
Source: Interactive Brokers
At-money, near-term options are implying a roughly 6% post-earnings move for NVDA. That is below the 7.39% average of the stock’s past 6 post-earnings moves (+3.25%, -8.48%, +0.53%, -6.38%, +9.32%, +16.4%). It is also below the 7% that was expected last quarter, and the 8.4% that was priced in two quarters ago.
Bottom line: the overall level of risk aversion ahead of NVDA earnings is modest. At-money options are pricing in a relatively unimpressive post-earnings move, though below-market options show some desire for hedges. We’ll know who is correct later today.
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Try asking it again, but use “madcap” instead of “megacap”., ok8)’ ? See if it has a sense of humor.
The dark pool signal at 179.81 that was just emitted in NVDA might be a factor. Who do we ask about those pesky manipulative dark pool signals anyway?