Video summary
Nvidia is set to release its highly anticipated earnings report tomorrow, and the stock has experienced a notable decline of approximately 9% in the days leading up to this event. Historically, Nvidia has not seen such aggressive selling pressure before quarterly reports, having previously hit all-time highs just days prior to their announcements. However, the current market dynamics suggest that this pre-earnings dip may be a strategic opportunity rather than a warning sign; by shedding weak hands and reducing overbought conditions, the stock could be positioned for a stronger rebound if the company delivers results that exceed expectations. The speaker believes that while some fear a significant drop to levels around 180 or even lower due to concerns like China-related risks, a worst-case scenario where the stock falls below the critical support zone of 195 to 200 is unlikely unless the earnings report itself disappoints.
The analysis highlights that Nvidia's recent price action should be viewed as a healthy consolidation phase rather than the stock being "stuck" or losing momentum. Despite the short-term volatility, the company has achieved substantial growth, rising roughly 15% to 16% year-to-date and recently breaking out from a previous trading range between 165 and 195. The speaker emphasizes that for a company of Nvidia's massive size, expecting it to double in value every single year is unrealistic, and the current period of consolidation is a natural step before the next leg up. Long-term investors are advised to focus on fundamental drivers such as free cash flow, gross margins, and compounding growth rather than getting caught up in short-term price fluctuations or gambling on binary options like calls and puts around earnings releases.
Looking ahead, the immediate technical challenge for Nvidia bulls is to maintain support above the $200 level, with a specific watch on the 180-day moving average at approximately 212. If the stock can break through this resistance level today, it could signal relief and potentially push prices back into the mid-200s or higher. Conversely, a breach below 190 would be considered a significant negative development that could trigger further declines not only for Nvidia but also for other key players in the AI sector like AMD and memory manufacturers such as Micron. The speaker remains optimistic about Nvidia's ability to crush both revenue and guidance, arguing that the current setup offers more room for error compared to being at all-time highs where even a slight miss could lead to a sell-off. Ultimately, the consensus is that unless the earnings data fails to meet high expectations, the stock is well-positioned to continue its upward trajectory despite the pre-market nervousness.
Read the full video transcript
So, tomorrow's the big day for Nvidia,
guys. Finally, finally we're getting
their earnings. So, let's break down the
charts, what I'm doing, other AI stocks
I'm watching, and overall where my
head's at with Nvidia as I do own the
stock, and the stock is starting to
creep up here in the pre-market the day
before earnings. So, guys, hit the like
button, make sure to subscribe, join my
Patreon if you want to keep up with my
portfolio updates, my trades,
investments, if you want to be a part of
my private Discord, all that's linked
down below, pinned in the comments, or
go to stasterfest.com/patreon.
And with that being said, guys, cheers,
take a sip of your coffee, and let's
dive into it. So, we're about 10 minutes
away from open the day before Nvidia's
earnings when I'm making this video, and
we're starting to creep up. And you guys
know, Nvidia stock has sold off a little
bit heading into earnings, which we
haven't done before the last couple of
quarters at least, right? You can see
over the last 5 days Nvidia's been,
well, in a straight downtrend. On the
30-minute chart, you're noticing the
same thing. We hit 228 back on the 17th
of August, and just a week later, right?
1 week later, we got down at 207. So, we
lost $20
a share on Nvidia, or about 9%. It
almost got into correction territory
yesterday heading into earnings, which
again, the last couple of quarters we
haven't done that. If we look at the
4-hour chart,
if I zoom in a bit here, we can see last
time they reported the stock hit
all-time highs at over 240 just days
before the print, and yeah, it sold off
a little bit into earnings a tiny bit,
but not this aggressively like we're
seeing right here. And then two quarters
ago, this stock hit a fresh high.
Um I don't know if it was an all-time
high at the time, uh but it hit 203. We
ripped all the way from 170 to 203 into
the print. Earnings came out, and then
boom, Nvidia tanked all the way down to
170, 175. So, what I'm trying to get at
here, guys, is this go around, we're
already shaking out weak hands. We're
seeing the selling pressure kick in
before earnings, which honestly could be
setting us up beautifully if Nvidia
crushes earnings and crushes guidance,
which a lot of people think they will. I
think they're going to do well, guys,
but is it well enough, or or or will
they do well enough
to get the stock price moving again
after being down 9% into the print? I
think, obviously, the chances are higher
now that it's sold off uh for it to for
it to rebound than, let's say, if it
didn't sell off, we were at all-time
highs, we were overbought into earnings.
Um then we'd be setting up for
potentially
a sell-off, especially if earnings
disappointed a little bit, or maybe too
much was priced in. So, I'd much rather
be in the position we're in now on the
stock um into earnings than being, you
know, well overbought, too much priced
in. I think there is more room for error
error
if there's, you know, if we've already
or not or not, there is more room for
error if it's
priced to perfection, right? But now
that we've shaken out the weak hands,
how much lower could this go? I I I got
comments saying Nvidia's going to go to
180 after earnings. The China risk is
massive right now. I I just don't see
it. I think maybe, okay, maybe if it
does go down, maybe 200, maybe 195, you
know, worst I don't want to say
worst-case scenario, but as long as we
maintain, I would say,
um you know, 195 to 200, even if it
pulled back, as long as we hold 195 200,
the bulls are going to be okay. They're
going to be just okay. Considering 195
200, that was support well the last
couple of months, and it was resistance
back in the beginning of this year. So,
on the charts, if Nvidia broke through
190, uh that would not be good, I must
say. Uh but we're not there yet. That's
a whole 'nother $20 below where we are.
So, let's not get ahead of ourselves,
right? Let's not psych ourselves out
here. Um
And as of now, yeah, there is a little
gap here that could fill to the
downside, uh but that's if really the
trade or not the trade, the earnings
disappoint. If the earnings disappoint,
okay, Nvidia, maybe it fills this gap
down to 200 195, maybe.
Uh but I just don't think we're going to
do that unless they disappoint, which I
don't think that's going to happen. I
think they're going to report great
numbers, um solid guidance, and
ultimately, look, we're at a higher low
here. We're maintaining um this trend.
We're we're fighting the bulls are
fighting. They're trying to at least.
So, keep your eyes, honestly guys, on
the 180 moving average on this 4-hour
chart. Um right at about 212. 212 needs
to break today. If 212 can break, 213
breaks, um the bulls could have some
relief. Maybe [clears throat] bulls go
back towards
um you know, the mid 200s or not mid
200s, mid 210s, right?
We'll see.
Uh but it all comes down to earnings.
And guys, I'm not a big fan of gambling
on earnings, buying calls, buying puts,
you know? So, I'm just holding on to my
long-term position through earnings,
like a lot of you guys are probably
doing as well. And uh we're we're
holding long-term. At the end of the
day, companies, stocks, right? Stock
prices, they follow fundamentals
long-term. Free cash flow, gross
margins, growth, earnings, you know,
compounding.
That's what,
you know, the
the these stocks follow. So, that's
where we're at. We're down about 9% from
highs heading into earnings. And a lot
of people are like, "Oh, Nvidia's been
stuck." I made a video on this yesterday
on my short-form content. You guys
probably see a lot of my short-form
content. It gets way more views than my
long-form content. But, either way, we
were talking about how Nvidia is not
necessarily stuck, quote-unquote. I
mean, people might think that because
people are so short-term minded.
Nvidia is a $5.3 trillion company, guys.
And it's not really stuck. I mean, we we
spent a couple months being stuck
between 165
to about 195, and then we broke out. Do
you guys not remember we were just in
the mid-200s? How is that stuck to me to
you, you know? It's not to me. How is it
to you? It went up 50% in the span of 50
days. Then it pulled back. Now it's been
consolidating for a couple months. Okay,
maybe it's stuck, quote-unquote. It's
not. It's not. It's just consolidating,
you know? This stock is up 15 to 16%
year-to-date.
You know, we're doing pretty well
year-to-date. What more do you want out
of this company, you know? It's like
it's not going to go up 50% every single
year, the stock, considering how big,
you know, of a company it is, how much
it's already gone up. So, it's not
stuck. It's just consolidating. And
we're getting ready for that next leg
up. This is how it works when companies
have grown to this size.
So, watch out for it to
again, maintain $200. I think we're
going to hold that support.
Um, you know, if it goes under 190, like
I said earlier, 195, 190, it could slip.
It could get uglier, but that's that's
going to be a problem for the broad AI
space if that happens. You know, if
Nvidia, the top dog, goes from 211 under
190, like some people are saying, um,
we're going to have more problems on our
hands uh with other stocks, you know,
AMD, for example. You know, the the
memory names, you name it. Micron's
already down to 910. I mean, it hit 1200
a couple months ago. SanDisk got
squashed, you know, it's trying to come
back, but if Nvidia stock really falls
down like like some people think, I
don't think that, but if some people or
some people think that, and if it does,
um, these other positions, stocks,
names, whatever you want to call them,
they're going to get hit, too. That's
the reality. Um, I just don't see that
really happening at least right now. Uh,
what do you guys think, you know? Let me
know in the comments. I'm curious. Um,
I'm going to wrap it up here. No need to
go on and on and on.
Keep it short, sweet, and to the point,
and we'll cover Nvidia
after their earnings now, most likely.
So, what do you guys think? Hit the like
button. Let me know your thoughts. Join
the Patreon if you want to keep up with
my portfolio updates, my trades,
investments. If you want to be a part of
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or go to stasurfcast.com/patreon.
And with that being said, I'll see you
guys in the next video.