To The Moon

$NVIDIA(NVDA)$ is scheduled to report its fiscal Q2 2026 earnings after the market closes on Wednesday, August 27, 2025.

I am holding NVDA for long term and in this article, I will be sharing how I planned to trade NVDA using option (Bull Put Spread).

Revenue: Analysts are projecting Q2 revenue of around $46 billion, which would represent a significant year-over-year increase but a deceleration from the explosive growth of previous quarters. Nvidia's own guidance is for revenue of $45 billion, plus or minus 2%. The key will be if the company can exceed these high expectations.

Earnings per Share (EPS): The consensus for adjusted EPS is approximately $1.01 per share. Similar to revenue, this would be a substantial increase year-over-year but a potential slowdown in growth rate.

Summary of Nvidia (NVDA) Fiscal Q1 2026 Earnings

Nvidia reported strong fiscal Q1 2026 earnings, demonstrating the continued explosive growth of its data center business, but also revealing some challenges, particularly related to geopolitical factors.

Revenue and EPS Beat: Nvidia once again exceeded analyst expectations. The company reported revenue of $44.1 billion, a significant increase from the previous quarter and a 69% year-over-year jump. Data center revenue was the primary driver, growing 73% year-over-year to $39.1 billion. Non-GAAP earnings per share (EPS) came in at $0.81, also surpassing estimates.

China Export Controls Impact: A major headwind for the quarter was the new U.S. export restrictions on AI chips to China. These new requirements led to a $4.5 billion charge related to excess inventory and purchase obligations for the company's H20 chips, which were developed for the China market. The company was also unable to ship an additional $2.5 billion in H20 revenue during the quarter. This had a significant impact on gross margins.

Gross Margin Pressure: The large one-time charge related to the H20 chips caused a noticeable drop in gross margins. While the reported non-GAAP gross margin was 61.0%, excluding the charge, it would have been a healthier 71.3%. This highlighted the financial cost of navigating the complex geopolitical landscape.

Blackwell Ramp-up: A key positive takeaway was the successful ramp-up of the Blackwell platform, with CEO Jensen Huang stating that the new AI supercomputers are now in "full-scale production." This indicates that the company is successfully meeting the strong global demand for its next-generation chips.

Lessons Learned from Q2 2026 Guidance

While the Q1 results were strong, the guidance for Q2 2026 provided several key lessons for investors:

Geopolitics are a material risk. The most striking takeaway from the guidance was the direct financial impact of the China export restrictions. Nvidia's Q2 revenue guidance of $45 billion (plus or minus 2%) explicitly reflected a projected loss of approximately $8 billion in H20 revenue. This demonstrates that geopolitical risks are not just theoretical but have a significant, tangible effect on Nvidia's top line. It also means that for the foreseeable future, a substantial portion of the company's addressable market in China will be restricted.

Growth is normalizing, but is still very strong. While the year-over-year growth rate remains impressive, the sequential growth is decelerating from the explosive pace of previous quarters. The Q2 revenue guidance, despite the $8 billion headwind, suggests a continued, albeit more moderate, growth trajectory. The focus is shifting from "how fast can they grow?" to "can they continue to grow at a sustainable, market-leading rate?"

Gross margin recovery is a key focus. Following the Q1 hit, Nvidia guided for a recovery in gross margins to 71.8% to 72.0% in Q2, with a longer-term goal of reaching the mid-70% range. This indicates that management is confident in its ability to navigate the China-related issues and restore profitability. Investors will be watching closely to see if they can achieve this, as it is a crucial metric for the company's long-term valuation.

Demand for AI infrastructure remains insatiable. Despite the China headwinds, the fact that Nvidia is still able to project a record quarter and is aggressively ramping up production of its new Blackwell architecture shows that demand from other regions, particularly for cloud and enterprise AI, is incredibly robust. The earnings call highlighted that global demand for Nvidia's AI infrastructure is "incredibly strong," with AI inference and AI agents becoming major new drivers of demand.

In summary, Nvidia's Q1 2026 earnings confirmed the company's dominance in the AI market and its ability to execute on a massive scale. However, the guidance served as a stark reminder that geopolitical risks are now a material and quantifiable factor that will influence the company's revenue and profitability for the foreseeable future.

Analysis of Q2 2026 Earnings Expectations

The market has very high expectations for Nvidia's Q2 2026 earnings, as the company remains at the forefront of the AI boom. While a strong report is anticipated, the focus will be on whether the company can maintain its extraordinary growth trajectory.

Data Center Growth: This is the most crucial segment for Nvidia. The data center business, which includes AI GPUs, now accounts for over 80% of total sales. Analysts project data center revenue to be around $40.97 billion, representing a 56% year-over-year increase. Any sign of a slowdown in this key segment could significantly impact the stock.

Gross Margin: In the previous quarter, gross margins took a hit due to a charge related to export controls on H20 chips for China. Management has guided for Q2 gross margins to be around 71.8% to 72.0%. Investors will be looking for signs of recovery and progress toward the company's long-term goal of mid-70% gross margins.

China Business and Geopolitical Risks: The impact of US-China export restrictions remains a significant wildcard. Nvidia has warned of an estimated $8 billion hit to revenue from these restrictions. Any updates on the company's strategy for the China market, including the new deal allowing sales of a modified chip, will be closely watched.

Key Metrics for Investors to Watch

Beyond the headline numbers of revenue and EPS, investors should pay close attention to the following:

Q3 Guidance: This will likely be the most important factor in the stock's post-earnings movement. The market is already forward-looking, and any guidance that falls short of expectations—even if the current quarter's results are strong—could lead to a sell-off. The current consensus for Q3 revenue is around $52.5 billion.

Data Center Revenue Breakdown: Look for details on demand from major customers, particularly hyperscalers like Microsoft, Amazon, and Google, as they are the primary drivers of growth. Commentary on the demand for next-generation chips like Blackwell will also be critical.

Segment Performance: While the data center is the main event, the performance of other segments, such as gaming and automotive, will also provide a more complete picture of the company's health. The automotive and robotics segments are expected to show strong growth.

Operational Commentary: Listen to the earnings call for management's commentary on supply chain dynamics, production ramp-up for new products, and the competitive landscape.

Nvidia (NVDA) Price Target

Based on 52 analysts from Tiger Brokers offering 12 month price targets for Nvidia in the last 3 months. The average price target is $196.75 with a high forecast of $372.87 and a low forecast of $100.00. The average price target represents a 9.42% change from the last price of $179.81.

Short-Term Trading Opportunities Post-Earnings

Trading Nvidia stock around earnings is notoriously volatile and carries significant risk. Here are some factors to consider for short-term opportunities:

High Volatility: Due to the high expectations and the stock's outsized influence on the broader market, Nvidia's stock is highly volatile around its earnings report. Options data suggests a potential move of 6.4% in either direction by the end of the week.

NVDA implied volatility (IV) is 43.4, which is in the 31% percentile rank. This means that 31% of the time the IV was lower in the last year than the current level. The current IV (43.4) is 0.5% above its 20 day moving average (43.2) indicating implied volatility is trending higher.

"Beat and Sell-Off" Risk: Even if Nvidia reports strong results that beat analyst estimates, the stock has a history of not always rising immediately afterward. In four of the past eight quarters, the stock has declined the day after an earnings beat. This can happen if guidance is not as strong as expected or if the current results fail to meet a very high "whisper number" from traders.

Leveraged ETFs: For traders seeking to capitalize on a short-term move, there are leveraged ETFs that provide amplified exposure to Nvidia's daily performance, such as Direxion Daily NVDA Bull 2X Shares (NVDU) and Direxion Daily NVDA Bear 1X Shares (NVDD). These instruments are designed for short-term trading and are not suitable for long-term holding due to their daily reset mechanics.

Two-Sided Trade: The high level of anticipation and the stock's sensitivity to guidance mean that a two-sided trade could be in play. A significantly positive report, particularly with strong forward guidance, could lead to a substantial rally. Conversely, any hint of a slowdown or an unexpected negative development could trigger a sharp decline.

Context: NVDA Earnings Setup

• Earnings Date: August 27, after market close

• Consensus Estimates: ~$46B revenue (+53% YoY), $1.01 EPS (+48% YoY)

• Key Themes:AI capex surge from hyperscalers (Amazon, Meta, Alphabet) China export license regained (H20 chips), but geopolitical risk lingers Valuation stretched (~58x earnings), expectations sky-high

• Implied Move: ~6% or ±$10.99 post-earnings

• Current Price: ~$181.00 (as of August 25 close)

Bull Put Spread Mechanics

A bull put spread profits if NVDA stays above the short strike at expiration. It’s a defined-risk, income-generating strategy ideal when you expect moderate upside or neutral price action.

Option Setup (Expiring Sep 26, 2025)

Technical & Macro Overlay

• Support Zones: $177.50 (recent pivot), $170.00 (21-day EMA), $165.00 (volume shelf)

• Resistance: $183.50–$185.00 (earnings run-up zone)

• Volatility: IV Rank ~20, relatively subdued despite earnings

• Macro Risk: China chip narrative, AI capex sustainability, Fed tone post-Jackson Hole

Scenario Modeling

Strategic Considerations

• Risk-Reward: 2.3:7.7 is decent if probability of staying above $175 is high

• Hedge Layering: Could pair with short-term call debit spread if expecting upside surprise

• Theta Edge: Time decay favors you post-earnings if NVDA stabilizes

• Adjustment Path: Roll down or out if NVDA breaches $175 pre-earnings

Summary

Analysts anticipate strong performance from Nvidia (NVDA) for its upcoming fiscal Q2 2026 earnings report, driven primarily by sustained demand for its AI-related products. Consensus estimates project revenue of around $46 billion, a significant increase of over 50% year-over-year. Earnings per share (EPS) are expected to be approximately $1.01, a jump of nearly 48.5% from the same period last year.

The company's data center segment, which accounts for the vast majority of its revenue, is expected to be the main growth driver. While a deceleration in growth is anticipated compared to previous quarters, the overall trend remains robust due to continuous investment in AI by businesses and cloud providers. The resumption of H20 chip sales to China, following a recent deal, is a key factor that could provide a tailwind, though its full impact on the quarter is a point of focus for analysts. The company's guidance for future quarters and updates on its new Blackwell architecture will be closely watched by investors.

Appreciate if you could share your thoughts in the comment section whether you think Nvidia can really provide a significant improvement in its earnings beat, which should surprise investors for a short rally.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.