Nvidia Q4 Earnings: Can it Beat High Expectations?

Its stock is bouncing back from the DeepSeek selloff. Can it hit the $38 billion revenue target?

• Nvidia will report quarterly earnings on Feb. 26 after the market closes, and it's expected to announce earnings-per-share of $0.85 on $38.13 billion in revenue.
• While the stock took a nosedive after the DeepSeek news, it has sharply recovered and still leads the industry in hardware.
• The expected stock price move is just over 8% for earnings week.
  

NVIDIA Earnings Preview

In just a few days, we'll end this earnings season with a bang with NVIDIA (NVDA) reporting quarterly earnings next Wednesday, after the stock market closes. After the massive drop in NVDA's stock price following the DeepSeek announcement, it's full steam ahead because we've seen the exact opposite market movement since then. Since its descent to a low of $113.01 in early February, the stock is hovering at around $140 per share.

NVIDIA is expected to report earnings-per-share (EPS) of $0.85 on $38.13 billion in revenue. Both figures are significantly higher than last quarter's estimates, with an increase of $0.10 in EPS and $5 billion in revenue. NVDA has boasted a perfect three-for-three over the last few announcements—each time it has exceeded EPS and revenue estimates.

Jensen Huang, founder and CEO of NVIDIA, had very strong positive words in the last earnings call: “The age of AI is in full steam, propelling a global shift to NVIDIA computing ... Demand for Hopper and anticipation for Blackwell — in full production — are incredible as foundation model makers scale pre-training, post-training and inference ... AI is transforming every industry, company and country. Enterprises are adopting agentic AI to revolutionize workflows. Industrial robotics investments are surging with breakthroughs in physical AI. And countries have awakened to the importance of developing their national AI and infrastructure ..."

After the knee-jerk reaction following the DeepSeek news, both the downside and upside, the market is watching NVDA earnings on the Feb. 26. Looking at the implied volatility of the options market in NVDA helps us put context around expected stock price moves.

For earnings week, NVDA stock has a +/- $11.90 expected range based on current implied volatility. Implied volatility is derived from options prices and can help us understand how much movement is priced in to each expiration cycle. The earnings expected move is about 8% of the notional value of the stock price, which puts NVDA earnings on the higher end of the typical 5%-10% range that most companies have in terms of implied volatility for earnings.

Looking to April 2025, we can see a +/- $20.50 stock price expected move for NVDA. This means the earnings call makes up for over 50% of the expected move priced into the next 56 days. That's a pretty big chunk, which confirms the market is ready for some large potential price swings after earnings.

Bullish on NVDA stock for earnings

If you're bullish on NVDA for earnings, you want to see another strong earnings report, with the AI chip giant exceeding EPS and revenue estimates yet again. More involvement in the mega-cap stocks in AI means more demand for chipmakers, and that plays right into the hands of a company like NVIDIA. It will be interesting to see how the landscape looks for NVIDIA in 2025 with earnings commentary. But for the recent rally to sustain, you'd have to imagine some big numbers are required on Wednesday.

Bearish on NVDA stock for earnings

If you're bearish on NVDA for earnings, you want to see some sputtering from the recent bullish momentum the stock has had over the past few weeks. A high earnings implied volatility isn't always a good thing either because it means there is a lot of uncertainty around what will happen after the announcement. That’s something to keep an eye on ahead of earnings, but if NVDA posts its first EPS or revenue miss in many quarters, we could see the stock fall afterward.

Tune in to Options Trading Concepts Live at 11 a.m. CST on Wednesday ahead of the announcement for some options strategies in NVDA for earnings.

Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb  

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