Chip Stock Hits All-Time High Before Earnings

Investors are expecting big things from AI’s biggest beneficiary

Semiconductor name NVIDIA Corporation (NASDAQ:NVDA) will report earnings after the close tomorrow, Aug. 23. Analysts anticipate fiscal third-quarter earnings of $2.09 per share on revenue of $11.22 billion, bolstered by the company’s dominance in chips used to power generative artificial intelligence (AI). NVDA earlier today hit an all-time high of $481.87, though was last seen 3.3% lower at $453.97.

Boasting a 215.2% year-to-date lead, Nvidia stock is outperforming the iShares Semiconductor ETF (SOXX) and the VanEck Semiconductor ETF (SMH) — up 42.2% and 48.7% year-to-date, respectively. NVDA’s trip up the charts was helped by its 40-day moving average, and a brief dip below this trendline was saved by the 70-day moving average near the $400 level earlier this month. 

NVDA Chart August 222023

It looks like the share have a good chance of moving even higher, as they have history of positive post-earnings reactions over the past two years. Specifically, six of these next-day sessions were higher, including a 24.4% pop in May. Options traders are pricing in a 15.8% post-earnings swing for the stock this time, which is much larger than the 8.6% move Nvidia stock averaged after its last eight reports, regardless of direction.  

Lastly, the security’s Schaeffer’s Volatility Scorecard (SVS) sits at an elevated 82 out of 100, indicating the equity has exceeded option traders’ volatility expectations in the past year.

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