The most famous stock in the market announced earnings this week.
- Total revenue of $96.2 billion, a 106% increase from a year ago.
- EPS of $2.22, which beat expectations by 6%.
The stock gapped toward all-time highs…
It’s the biggest story in the market.
This is the catalyst we’ve been waiting for. Don’t squander this opportunity.
The market’s been sluggish most of the summer, and now that we’re moving into the fall and winter months, this recent earnings announcement could be the starting gun for what’s to come…
Huge trade opportunities ahead.
NVDA Earnings
You can read the whole report here.
Revenue came in at $96.2 billion, that’s up 18% from last quarter and more than double where it was a year ago.
The company’s data center business is responsible for $89.0 billion of that, it’s up 117% year over year.
Operating income hit $63.7 billion, a 124% jump. And gross margins expanded to 75.0%. At this scale, that shouldn’t be possible.
But here’s the part that actually moved the stock:
Management is calling for $108 billion next quarter. That’s another $12 billion sequential jump. And they’re assuming zero data center revenue from China.
No China and still triple-digit growth…
They also lined up financing platforms with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to mobilize over $500 billion of third-party capital for AI infrastructure. NVDA is building the plumbing for its own demand.
The one wrinkle: accounts receivable ballooned to $63.1 billion from $38.5 billion at year-end. Plus, inventories climbed to $31.6 billion while free cash flow dropped to $21.3 billion from $48.6 billion last quarter.
Bears will hammer the negatives. But the bull answer is simple: you can’t ship $89 billion of data center products without financing the ramp. And NVDA knows this. That’s why it’s building the infrastructure itself.
Bottom line: the fundamentals came in red hot, the guidance came in even hotter, and the stock gapped toward all-time highs.
My Trade
The move on NVDA is new. If I’m going to make a reversion trade, I need to see it push higher from here.
I’m sitting and watching NVDA for now.
But there’s another trade I made as a result of the market’s reaction to the earnings.
The iShares Russell 2000 ETF (NYSE: IWM) is a small-cap ETF that’s comprised of the 2,000 smallest companies from the Russell 3000, which covers about 98% of the investable U.S. equity market.
NVDA is in the Russell 3000, but it’s not in the Russell 2000.
And when NVDA gapped up on August 27, the IWM didn’t follow.
Here’s what that means: small-cap stocks aren’t spiking alongside NVDA’s success, like we’ve seen in the past. That points to weakness among small-cap tech stocks after earnings season has already passed (which means there aren’t any more tech catalysts scheduled to give them an extra boost).
I think the IWM will fail to reclaim $300 and slide lower due to that lack of strength.
Here’s the trade alert I sent on August 27 at 9:42 A.M. ET:
BUY IWM 8/28/26 299 PUTS 1 STAR 1.60 MAX TARGET 294
If you’re reading this for the first time right now, it’s too late to get in. But make note of this correlation and my strategy. We can reuse these patterns over and over again in the market.
Speaking of which, there’s a trading tutorial starting in a few hours.
Want to find trade opportunities with self-sufficiency? No need for trade alerts or hot picks…
Once you learn these strategies, you can reuse them on the next hottest stock.
Stay Street Smart,
Jeff Zananiri
*Past performance does not indicate future results, Not typical.
