Nvidia’s upcoming earnings report could have a significant impact on the stock market, potentially triggering a 10% crash, warns macro strategist Peter Tchir. He cautions that any disappointment in Nvidia’s earnings could lead to a rapid sell-off of 5% to 10% within a few days.
Tchir notes that the market heavily relies on Nvidia’s earnings, and a negative outcome could result in a cascading effect where investors try to buy the dip, only to see further downward pressure on the stock. Despite recent market rebounds, Tchir highlights a large number of bullish bets on Nvidia, with options traders anticipating an 11% upside following the earnings call.
While analysts predict significant earnings for Q4, with a forecast of $4.53 per share, there are concerns about potential profit-taking post-earnings release. A Bank of America analyst has warned of a possible pullback, projecting an 11% implied post-earnings move based on optimistic buy-side estimates.
In light of these developments, investors are advised to view any potential drop in Nvidia’s shares as an opportunity rather than a setback. This dip could be attributed to profit-taking ahead of the earnings report, creating a potential entry point for new investors.
Nvidia’s stock has experienced significant fluctuations in recent months, facing challenges followed by a remarkable recovery driven by increased demand for artificial intelligence and gaming. While the company’s shares have shown resilience, it remains to be seen how the market will react to the upcoming earnings report.
As investors brace for Nvidia’s Q4 earnings, the stock’s performance in the aftermath could serve as a barometer for market sentiment. With expectations running high, a cautious approach may be warranted to navigate potential volatility and capitalize on opportunities presented by any price fluctuations.
