Nvidia Reports Strong Results, But Will The Be Good Enough?

5/21/24

#Stocks: $NVDA

#Macro: $SPX,

Mike’s Reading The Markets Macro Subscription Service on Seeking Alpha

See Me At The Seeking Alpha Investing Summit

The S&P 500 finished the day down around 30 bps following a more hawkish reading of FOMC minutes than what was expected, at least in my view. This is interesting because many of the speakers I have heard have suggested they would raise rates if needed, but they have done it with caveats, and the way the Fed minutes read, it just came across as much more straightforward. Additionally, it was clear from the minutes that not all Fed officials seem to think that policy is very restrictive and question how tight the policy is.

So, we saw some volatility later in the day. It showed up around 1:30, before the Fed minutes, and moved lower immediately thereafter.

Meanwhile, Nvidia reported results that were better than expected, which was expected and driven by a revenue beat. Additionally, adjusted non-GAAP gross margins were better. The guidance also came in better at $28 billion versus estimates for $26.8 billion, while the gross margin is expected to be at 75.5%, which was below estimates of 75.6%. The market looked past that miss on gross margin and focused on the 10-to-1 stock split, which means nothing other than the reduced price and more shares outstanding. But the market liked the split news, and the shares moved higher. Another story is where the stock trades tomorrow and whether it holds the gains. The positioning was very bullish heading into the results, and the IV was very high; the key is for the stock to hold over that $1000 level because that is the “call wall,” and if option holders choose to sell those calls, it could keep a lid on things.

The tricky thing, of course, is that the $1,000 calls for expiration on 5/24 had a premium of $19.20. With the IV coming down and the stock trading around $1000, those calls may lose value tomorrow, which could prompt sellers. This is similar to the $950 calls, which had premiums of $38.63, and that would require the stock trading above $989 for those to start paying off by Friday’s expiration.

(BLOOMBERG)

We also saw the USDMXN move higher today and towards resistance around $16.70. So, we will want to pay attention to this move higher in the USDMXN to see if it sticks and if there is some life to it.

-Mike

Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.

This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice. Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.