NVIDIA's $55 Billion Revenue Hurdle
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Terms By ChatGPT
S&P 500 – A stock market index tracking the performance of 500 large companies listed on U.S. exchanges.
AI Rally – The market surge in technology stocks driven by excitement around artificial intelligence.
Revenue Guidance – The forecast a company provides for future revenue, typically for the next quarter.
Beat – When a company reports earnings or revenue higher than analysts’ expectations.
The Street – Informal term referring to Wall Street analysts and consensus market expectations.
Gamma Level – In options trading, a level where large option positions can influence stock price movements.
Call Wall – A strike price level with heavy call option concentration, often acting as resistance.
Put Wall – A strike price level with heavy put option concentration, often acting as support.
Expected Move – The range of stock price movement implied by options pricing around an earnings event.
Implied Volatility (IV) – The market’s forecast of a stock’s potential price swings, reflected in options pricing.
Delta Exposure – A measure of how sensitive a portfolio of options is to changes in the underlying stock’s price.
Fully Edited Transcript
NVIDIA will report results this week, and given that it is now the largest company in the S&P 500 by a wide margin, this release carries significant weight. The rally in NVIDIA’s stock has been driven almost entirely by AI-related demand, and the company has become the clear leader in that space. Some of the numbers surrounding this earnings report are staggering, making it difficult to know exactly how to frame expectations.
For this quarter, NVIDIA is expected to report $45.9 billion in revenue, rising to $52.7 billion next quarter. Historically, NVIDIA increases revenue sequentially by about $4–5 billion per quarter, a pattern that has held since the third quarter of 2023. However, this quarter’s expected increase is only $1.9 billion, with a much larger $6.8 billion jump projected for the fiscal third quarter.
NVIDIA also has a consistent history of guiding revenue $4–5 billion higher than the prior quarter. For example, in fiscal Q1 2025, management guided revenue $5.6 billion higher than Q4. Yet, this quarter’s guide was only $2 billion above the prior quarter, a notable deviation. To remain consistent with its historical trend, NVIDIA would need to report $48–49 billion in revenue, which falls within the company’s typical pattern. A shockingly strong quarter would require revenue closer to $50 billion.
The challenge arises with forward guidance. If NVIDIA follows its usual $4–5 billion increase, guidance would land near $50 billion—yet the Street is already expecting $52.7 billion. To surprise to the upside, NVIDIA would need to guide to $54–55 billion, roughly $1–1.5 billion above consensus. That would represent a $9–10 billion sequential increase in guidance, far beyond its historical $4–5 billion pace. Achieving that would require the company to effectively double its normal guidance growth rate, a feat rarely seen in corporate earnings history.
From an options perspective, the setup reflects these sky-high expectations. Key gamma levels sit at $180, with a call wall at $185 and a put wall at $170. The expected move in the stock is 6.3%, implying a trading range between $167 and $189, neatly bracketed by support and resistance. Implied volatility is currently 62% and could rise toward 100% by Wednesday, amplifying premium costs.
For example, the $180 call option costs $5.28, meaning the stock must reach $185.28 by Friday for the position to break even. Given the call wall at $185, this creates a difficult setup for bullish traders. If NVIDIA does not convincingly clear $185, call holders may be forced to sell, pushing the stock back toward the $170 put wall. Only a massive upside surprise—well beyond historical norms—would be sufficient to propel the stock above resistance and sustain gains.
In short, NVIDIA faces one of its steepest hurdles yet. The market is already pricing in extraordinary growth, and for the company to deliver an upside surprise, it may need to post revenue and guidance numbers at levels never seen before.
Disclaimer
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