Post-earnings checklist for Nvidia Investors Post-earnings checklist for Nvidia Investors Post-earnings checklist for Nvidia Investors

Post-earnings checklist for Nvidia Investors

Options 10 minutes to read
Koen Hoorelbeke

Options Strategist

Earnings season is a critical time for investors, providing valuable insights into a company's performance and future prospects. For a tech giant like Nvidia, post-earnings analysis can reveal crucial details about its financial health, strategic direction, and market position. To make the most of this information, it's essential to follow a structured approach.

This guide offers a detailed checklist to help you navigate Nvidia's earnings report and subsequent developments. By systematically examining key areas such as financial results, future outlook, and strategic initiatives, you can gain a clearer understanding of the company's trajectory. Additionally, we'll explore methods to enhance your investment strategy, ensuring you are well-positioned to manage risks and capitalize on opportunities.

Whether you are a seasoned investor or new to the market, this checklist will provide you with the tools needed to make informed decisions based on Nvidia's latest earnings. Let's dive into the post-earnings checklist to uncover the insights and strategies that can drive your investment success.

Post-earnings checklist for Nvidia

Results analysis - Beat or miss?

  • Earnings per share (EPS): Did the EPS meet or exceed analyst expectations? Analyze any significant deviations and understand the reasons behind them.
    • Earnings per share (EPS):
      • Q1 FY2025 EPS: $5.98 (GAAP), $6.12 (Non-GAAP)
      • Comparison to Analyst Expectations: Nvidia's EPS significantly exceeded expectations, up 629% from the same quarter last year (GAAP), and up 461% (Non-GAAP) (NVIDIA Newsroom).
         
  • Revenue: Was the reported revenue in line with expectations? Look for trends in sales growth or declines.
    • Revenue:
      • Q1 FY2025 Revenue: $26.0 billion
      • Comparison to Analyst Expectations: Nvidia's revenue grew 262% year-over-year, demonstrating strong performance and surpassing expectations (NVIDIA Newsroom).
         
  • Other financial metrics: Examine margins, operating income, and cash flow for a comprehensive understanding.
    • Gross Margin: 78.4% (GAAP), 78.9% (Non-GAAP)
    • Operating Income: $16.9 billion, up 690%
    • Net Income: $14.9 billion, up 628% (NVIDIA Newsroom).
       
  • Financial statements: In-depth review: Go beyond the headlines to scrutinize the balance sheet, income statement, and cash flow statement for any red flags or areas of strength.

    Looking beyond these figures, the balance sheet, income statement, and cash flow statement show significant strength. For instance:

    • Total Assets: $77.1 billion, up from $65.7 billion last quarter
    • Total Current Assets: $53.7 billion, up from $44.3 billion
    • Net Income for Q1 FY2025: $14.9 billion, up from $2.0 billion last year
    • Ten-for-one forward stock split effective June 7, 2024 (NVIDIA Newsroom).
      (a stock split could be beneficial by making the shares more affordable to a broader range of investors, potentially increasing demand, but it could also be seen as negative if it indicates the company is artificially inflating its stock price without underlying growth)

Future outlook

  • Guidance: Next quarter/year expectations: Pay close attention to the company's guidance. Are the projections optimistic or cautious? How do they compare to previous forecasts?
     
    • Next quarter/year expectations:
    • Revenue: Nvidia expects Q2 FY2025 revenue to be approximately $28.0 billion, plus or minus 2%.
    • Gross Margin: GAAP gross margins are expected to be 79.0%, plus or minus 50 basis points.
    • Operating Expenses: GAAP operating expenses are projected to be around $3.5 billion (NVIDIA Newsroom).
       
  • Strategic initiatives: New projects and partnerships: Consider any new ventures, partnerships, or market expansions mentioned during the earnings call. Assess their potential long-term impact on the company.

    • Collaboration with Google: Nvidia continues to optimize its data center and AI platforms with Google.
    • Expansion with AWS: Hosting NVIDIA® DGX™ Cloud on Amazon Web Services.
    • Partnership with Amgen: Using NVIDIA DGX SuperPOD™ for drug discovery and diagnostics (NVIDIA Newsroom).

Investment thesis

  • Revisit your thesis: Alignment with original thesis: Does the latest earnings report support your original investment thesis? Ensure your reasons for investing in Nvidia still hold true.
  • Adjustments: Valuation and forecast updates: Based on the new information, you might need to adjust your valuation of the company or your forecast for its future performance.

Staying informed

Recommended Articles

  1. May 24, 2024: Key Stories from the past week
  2. May 24, 2024: Nvidia earnings, electrification boom, and bubbles
    • The article discusses Nvidia's recent earnings surge, driven by strong AI demand, and explores the broader themes of electrification and potential bubbles in the US equities market, highlighting key players in grid technology and upcoming significant earnings reports
    • Read more
  3. May 23, 2024: Technical Analysis: Nvidia Hits New All-Time High
    • Technical analysis of Nvidia's stock, exploring its recent all-time high and potential for further growth.
    • Read more
  4. May 22, 2024: Nvidia: Can it fend off the barbarians at the gate?
    • Article discussing Nvidia's strategies to maintain its market dominance amidst increasing competition.
    • Read more
  5. May 21, 2024Podcast: Equities Update
    • This podcast-episode covers the latest trends in the equities market, focusing on Nvidia's recent performance and market positioning.
    • Read more

Portfolio enhancement strategies

  • Risk management and diversification: Balancing your portfolio: Consider strategies to balance your portfolio in light of the earnings results. This may involve adjusting positions to manage risk effectively.
  • Enhancing returns: Exploring new opportunities: Think about ways to enhance your portfolio returns through strategic investments. Look for tools and instruments that offer flexibility in adjusting exposure and capturing potential upside while managing downside risk.
  • Leveraging market conditions: Tactical moves: Utilize market reactions post-earnings to make tactical moves in your portfolio. Whether it’s rebalancing, diversifying, or strategically positioning your investments, there are sophisticated methods to optimize your portfolio’s performance.
Guide on long-term options for strategic portfolio management
Long-term options can be a prudent addition to your investment approach if you're looking to:
  • Secure gains and reduce exposure from positions with significant profits.
  • Diversify your investment portfolio without completely divesting valuable holdings.
  • Maintain flexibility in your market exposure with a reduced capital commitment.
Guide on long-term options for strategic portfolio management

Tips for Post-Earnings Period

Maintain rational decision-making

  • Avoid emotional reactions: Post-earnings periods can be volatile. Ensure your investment decisions are driven by thorough analysis rather than short-term emotional responses.

Conduct a post-earnings review

  • Evaluate performance: Compare the latest earnings report with your expectations and the market consensus. Identify key drivers of any deviations.
  • Update your investment thesis: Use the new data to reassess your investment strategy. Adjust your valuation and forecast models as necessary.

Leverage market opportunities

  • Identify trends: Look for emerging trends or shifts in the market sentiment post-earnings that could impact Nvidia's future performance.
  • Adjust positions: Consider rebalancing your portfolio to optimize risk and return based on the latest financial insights.

Conclusion

Nvidia's latest earnings report demonstrates significant growth and robust performance across multiple sectors, reinforcing its position as a market leader. By analyzing key financial metrics, revisiting investment theses, and leveraging expert insights, investors can make informed decisions to optimize their portfolios. Staying rational and conducting thorough post-earnings reviews are essential strategies to navigate the volatility and capitalize on market opportunities. With strategic initiatives and strong future guidance, Nvidia continues to show promising potential for sustained success.


Options are complex, high-risk products and require knowledge, investment experience and, in many applications, high risk acceptance. We recommend that before you invest in options, you inform yourself well about the operation and risks. In Saxo Bank's Terms of Use you will find more information on this in the Important Information Options, Futures, Margin and Deficit Procedure. You can also consult the Essential Information Document of the option you want to invest in on Saxo Bank's website. 

Disclaimer

The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.