NVDA Pre-Earnings DD (Sentiment and Technical) To Go with 77k Position

Brief long NVDA thesis for earnings run-up

Fundamentals

AI CAPEX accelerating into FY25 with hyper-scalers guidance (META, GOOG, MSFT, ORCL)
- Watch for AMZN earnings after mkt tmrw
- Don’t care if AI is a bubble; companies will keep spending in the short term
Continued moat, industry dominance, and margins confidence per AMD earnings
- NVDA dominance strengthening
- Deep-seek is Jevon’s paradox
Double selloff recently (Deep-seek, tariffs) gave the stock a ~15% haircut, giving room to run
- China tariffs priced in for now, Singapore an option

Technical Pre-Earnings Analysis

NVDA always bullish, runs-up in the ~2-3 weeks before earnings
- 1Q24 – 84 to 95 from 5/1 - 5/22 earnings, 13% run
- 2Q24 – 102 to 127 from 8/8 - 8/28 earnings, 24% run
- 3Q24 – 134 to 148 from 11/1 - 11/20 earnings, 10% run
Taking the midpoint for ~16% run up into 2/26 earnings, PT of ~143
- 4Q24 forecast run-up of 124 to 143 for ~16% run to pre-Deep-seek levels
- Intuitive to fill Deep-seek gap, reversion to mean as fear is replaced by optimism leading into earnings

Risk To Downside

Overall further risk to downside is low
- More Trump volatility, tariffs (more market risk, can be hedged)
- Poor tech earnings (mostly behind us, trend is CAPEX to continue)
- Another Deep-seek; depends on perspective, news already expected
Worst case stock trades mostly sideways

Constructing the Trade

Anticipating the run-up to 2/26, we notice 2/28 calls are ~2x the price of 2/21 calls
2/21 calls allow us to ~2x exposure to pre-earnings run-up, lose IV increase approaching earnings
Discount ~143 PT by ~5% gives ~138 PT for 2/21, 167% upside on the Feb25 130c @ current 3.0 price

Positions