What To Expect From Nvidia's Q2 Earnings

NVIDIA Corporation NVDA is scheduled to report its second-quarter results after Thursday's close. Analysts, on average, expect EPS of $1.66 on revenue of $3.1 billion.

The Analysts

BMO Capital Markets' Ambrish Srivastava maintains a Market Perform rating on Nvidia with an unchanged $225 price target. Elsewhere, Stacey Gilbert, head of derivative trading at Susquehanna, talked options play on CNBC.

The Thesis

Srivastava is modeling Nvidia to show the following:

• Revenue down 3 percent from the prior quarter to $3.1 billion.
• GAAP gross margin of 63.3 percent.
• GAAP EPS of $1.65.
• Inventory of 77 days.
• Cryptocurrency-related concerns will take a backseat towards other favorable drivers of the business.

Gilbert: Ordinary Reaction Expected

Shares of Nvidia are up more than 300 percent over the past two years and 32 percent since the start of 2018 alone, Gilbert said during a recent CNBC "Trading Nation" segment. Given strong expectations for continued momentum in the quarter, it's unusual the option market is pricing only a 6 percent move in either direction.

Over the past eight quarters, the stock has moved on average nearly 9 percent in either direction immediately following an earnings report, Gilbert said. The volatility priced in to Nvidia's print is the lowest the option market has seen over the past two years.

Nvidia's stock continues to outperform the broader market, but at the same time the options market is pricing in minimal risk for the stock ahead of its report.

Nvidia traded around $261.37 at time of publication Tuesday.

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