Nvidia earnings preview: Gaming chips and Arm merger in focus

Traders will be keen for an update on the company’s pending $40B acquisition of UK semiconductor company Arm...

Tech (2)

At almost exactly half a trillion in market capitalization, chipmaker Nvidia (NVDA) is a top 10 holding in the Nasdaq 100, and many analysts have argued it should replace Netflix as the “N” in the “FAANG” acronym of megacap US technology stocks.

See the key details, themes, and price levels to watch from Nvidia’s upcoming earnings report below:

When are NVDA earnings?

Wednesday, August 8 after the closing bell.

What are NVDA’s earnings expectations?

Traders are expecting the company to report $1.02 in EPS and $6.3B in quarterly revenue.

Key themes to watch from NVDA earnings

The vast majority (~85%) of NVDA’s revenue comes from its gaming and data center segments, so that will be the primary area of focus. The ongoing shift to cloud computing and digitally-enabled remote work has been a major driver for the company in recent quarters, and traders expect those trends to continue even as many developed countries fitfully reopen as the COVID pandemic recedes. Meanwhile, NVDA also launched its GeForce RTX 30 Series of chips at the start of the year, and sales for the line should remain strong as gamers and other users upgrade their rigs.

Finally traders will be keen for an update on the company’s pending $40B acquisition of UK semiconductor company Arm. UK regulators have expressed some national security concerns over the merger, but if and when those concerns are addressed, it would be a bullish sign for NVDA’s stock.

NVDA stock technical analysis

Speaking of the price action, NVDA has been on a tear since bottoming near $116 in early March. The stock nearly doubled to peak at about $208 through early July before retracing to test its 50-day EMA around $180 by mid-month. Now, prices are once again on the march, with the rising 50- and 200-day EMAs pointing to a healthy long-term uptrend. In the immediate term, a stellar earnings report and strong guidance could push the stock to break out to new record highs above resistance in the $208 area, whereas a more tepid report could take prices back down to retest the 50-day EMA near $190.

Source: TradingView, StoneX

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