Quick Thoughts on NVIDIA, CrowdStrike, and OKTA. Are they a buy after earnings??

hi everyone sleepy Soul here and in today's video we're going to talk or do a quick video on uh the earnings report uh that happened after hours on August 28th of crowd strike Nvidia and OCTA uh maybe even briefly mention in Salesforce I have a lot of commentary on them as usual if you like these kind of videos click the like And subscribe button down below uh so we're going to start with crowd strike uh even though we have some Nvidia numbers on the screen um so crowd strike uh notably came into this print uh you know aggressively moving to the upside from their low of $200 uh it hit a high of I think 275 or two sorry 280 uh before pulling back a little bit and and basically entering the print to 265 that's important because it's they're still about 35 to or 30% down from their all-time high of just under $400 um which happened right before they had the bricking I guess of every Microsoft computer until the update got manually pushed through and that's what caused the stock price depl right so we knew this past quarter which ended uh August was going to be fine uh August 1st was going to be fine it just there was no there was no real risk that something that happened basically the last week of the month was really going to affect the actual stock the actual quarter report um the issue was guidance it was all about guidance and their guidance came in a little bit soft though my sense was not as soft as the market was expecting and you kind of see that now the the thing I was looking for was seeing if they were going to set aside any anything for any liability issue they didn't um you know similar to how Banks set aside money for lone loss Provisions I expected that they would might be doing something like that specifically with them getting sued by Delta uh most notably but they seemed they even kind of briefly mentioned it on the conference call they didn't see that it was going to be they don't think this is going to be a long-term issue and you know again if this is a one-off the longer this we get away from basically this the better the stock this the uh the better the company uh does because people forget that there was a massive outage everyone will be happy and the stock will just grind higher uh that being said again it's still it's still fairly expensive uh it's trading at I think what 45 times next year's number uh might that might be a little little high might closer to 40 but it's 40 45 times next year's number uh and now you have this possible issue of of of grow of growth slowdown so there's going to be an anticipatory multiple compression at some point in the next two years that's just going to happen like you just cannot sustain uh north of 35 times an EPS number without without seeing explosive growth but even that growth eventually tapers off uh you know that's why there's multiple compressions so really those are the two near-term headwinds uh the guide down was was again expected it was about 10% below what the street had numbers you know basically back in June and July oops thought I slow my pen up back here so it wasn't too terrible again the stocks down 30% a 10% guy down Pro is pretty much in the stock at this point the stock fell after hours uh to about uh 150 or sorry not 150 257 258 259 right in that area right below 260 uh my sense is this one's going to kind of move with the broad Market which we'll get to when we get to Nvidia but if if the broad Market is flat up or flat tomorrow my guess is this gets to 270 to 275 um if the Market's down this will also be down with it but probably not in simp but not as aggressively again if you're bullish cyber security names you probably do want to be long crowd strike here you can probably comfortably get long anything below uh anything between here uh as long as the up this long-term uptrend is holds right here you could probably get long anywhere in this area and then you will see uh upside now will the upside be as explosive as it was you know since 2020 uh since January 2023 where it's just been you know hit it hit below $100 and then hit as high as $400 it's not I'm gonna be honest like this was this included S&P inclusion uh a lot of the growth it went from not profitable to profitable a lot of that inflection growth has already is really built into the stock that being said again it could go up to this longer term trend line it's been on since the IPO that that gets us nicely to you know somewhere around the realm with $300 early uh uh sorry gets the $300 midpoint next year again you're not going to get a lot of the the explosive upside in this name is probably done unless there's more downside but if you want to beong cyber security you can't do you can't can't do a lot better than crowd strike um that's one of the reasons I didn't make a video specifically on crowd strike when the thing fell it's just the upside just isn't as attractive as paloalto was when it was in the 200s even palto's growth is slowing too uh next we're going to talk about OCTA which is also another cybercity name so they had a fantastic quarter growing Topline Revenue mid teens the problem was again with their guidance uh guidance came in at basically 11% if I'm not mistaken was topl line revenue numbers uh it might have been 10% but it's roughly in there it and they even said on the conference call that they were being very conservative with their Guidance the stock fell to the high 80s I think it was 88 when the post aftermarket closed um honestly I think you buy this name uh they're going to do about $2.75 in earnings this year going to do about $3 and let's call it 10 cents next year so they're uh if not higher they're they're just they're they're growing it's a it's a stable product I mean it's a it's potentially getting to a point where it might be a buyout Target if it falls much lower uh either private Equity at you know can buy them at close to A2 billion valuation which is about 10 about 15% higher than here it's about 110 uh or $1 120ish doll or you might see someone like Cisco step in and buy them IBM is a potential Suitor even though they both have ongoing purchases or have made re recent purchases uh o is kind of a nice tuck in purchase for one of the more Legacy uh Tech you might even see uh broadc comp by them this might be not a terrible place to you know filter into broadc comp's portfolio where they can just you know generate the cash uh internally and help the stock price you can use broadcom stock is historically elevated comparatively to to history so it wouldn't be surprising if if they turned around and tried to offer OCTA you know an all all share buyout uh again roughly in the $105 to $110 range I'm using that range because I think that's the price Target closer to the end of the year uh you can buy this some weakness I think in the high 80s because I do think this gets to Triple digits again if not uh it basically reproach or re uh re reproaches this High uh that it made back in March where it hit 100$ 110 to $115 uh that's where I think uh if you if if grow if they are sandbagging and growth does get to the mid teens again that's where I think it's worth now OCTA has been a nightmare um on a longer term basis it you know went up since since oops went up since the IPO peaks in February of 21 along with the broad market with the you know GameStop uh kind of BS squeeze uh makes you know kind of breaks through the ascending Tri breaks down over the triangle collapses stock gets as low as $42 uh and then it's been kind of range bound it's trying to find more purpose ever since now you know you can kind of kind of kind of kind of kind of if you really wanted to like do that and again you're seeing this live so I just threw that on there let me just make sure it looks decent yeah it's close enough um you know it hits it hits the lower end of this uh June and now it's providing some sort of upside resistance uh you know you see the resistance in March of 23 uh June of 23 uh it kind of broke through it very briefly in March 24 and then collapsed and then provided resistance again in May so you know this is kind of your upside resistance Target so again $110 in January is probably where this thing heads uh if it wants to get above that longer term trend line again this a very light trend line you know it's not very serious there's only a couple touches uh and then a big big big big space of of empty Air Above It uh so but you know you can kind of make an argument it's going to follow this trend line up for the next couple years uh if if it if EPS growth continues and again it looks like it is I again I think $325 or 310 to 325 next year's number it's pretty attractive uh when you think about the stack is less than $90 it's it's basically trading you know you're getting potentially teens level growth mid teens level growth uh on Topline revenue and you know that's going to flow right directly to EPs and alternatively you know it's trading at what 26 or 27 times earnings uh maybe even less than that if it's at $90 a share so again very attractive name at its current price uh I think if you want to get long software you can't do a lot worse than OCTA given its defendable position in the tech space uh you know there's not it's not like Salesforce where there's constantly new CRM softwares coming out that he has to fight against okay now it's time for the big boy uh so we're talk about Nvidia um so I thought their print was great uh very honest it was a solid print um these are the numbers here uh data center growth Still Still grew fantastically almost 20% gaming was you know up what 5% uh professional Vis visualization visualization was up 5% Auto was up 3% and OEM and other other were up about 10% uh so total revenues were up uh about 15% to just $30 billion now this is notable because the whisper number had them at 29.8 five billion for this quarter they were at 3.04 um and then the guidance and this and the whisper number is the buy side so these are the people that actually buy stock not the sell side like oh we're going to put estimates so that no that uh if if if you can't if an elephant can't hop over them you know the stock deserves to go lower right uh and then guidance for the cell side was 32.9550 billion um they guided to 32.5 billion uh for next quarter um so the sell side or sorry not the sell side the buy side um analysts were above what Nvidia wanted or nvidia's guidance was uh at the at the at the high end of the guidance range okay so the stock fell after hours now the reason it really the real reason it fell wasn't so much guidance uh Revenue numbers it was one because the cell side is finally on top of the numbers they don't need to chase right the number came in roughly in line on the revenue basis and the guidance was higher than than Nvidia uh nvidia's number uh if Nvidia had guided to like 34 35 billion the stock would be up 30% because there's so many upside calls that even just triggering some of those levels that you know suddenly the uh the alos have to buy to Delta hedge correctly uh it would it would send the stock just like you know up up up up up up up up up and then you know you get you get a similar chart to this which is what happened after the last earnings right it gapped and then it just ripped uh and it didn't stop ripping until basically the Alo alos were able to get a hold of them or get a hold of enough shares to to offset the calls right so now suddenly that call Premium needs to burn because uh a lot of those are short-dated calls and I say short dated it could be anywhere from you know one week two weeks three or this Friday one week uh two weeks three weeks basically anything into a month you know suddenly now those those Deltas have to puke a little bit and the stock goes down now the stock went down to6 it basically went down to the 21-day moving average which was $117 um after hours I think it closed roughly there too uh in terms of in terms of their their Guidance the issue is no longer on revenue and that's that's what I wanted to talk about how like Revenue doesn't really matter uh great they're going to do 32.5 billion hell they let's just write let's just pencil them in and say they're going to do 33.5 billion like they beat by a billion dollars congratulations like that's irrelevant the bigger problem for NVIDIA Bulls is all about the margin story so the last two quarters which was this quarter here and then this quarter here their margins were like either at or slightly below 80% that meant for every dollar this is their gross margins by the way not their operating margins which are slightly different but um for for but for the purpose of the discussion don't it's a distinction without a difference uh that meant for every dollar they were earning 80% of that was coming back as margin approximately slightly less than that on that they guided to 70 to sub 75% margin which means in six months their margins have fallen almost 10% uh 8% to be exact 7.5 actually um so if you think margins are done being compressed and we'll talk about why I don't think that's true in a second uh Nvidia is probably a Buy in the mid 110s if it gets below the 110 level uh it gets a little more attractive if it gets below $100 you probably just buy upside calls and just chill um so basically if it retests this level okay the issue with why I don't think that they're going to stop at 75 or just below 75 technically which is where they were guiding to um the lowering the high margins were purely based on a supply demand Dynamic that was completely out of whack there was no Supply and a lot of demand so people were double ordering triple ordering because they needed as many uh uh h100s as they could get they need as many black wall as they can get whatever so as the new chipset comes out again the new chipset is semi-relevant it's a demand issue if the demand is just slackening slightly and it doesn't need to slacken much we're not talking about like Nvidia dropping to $10 or $20 a share I want to be very clear about that we're just talking about margins changing because Nvidia just can't price it whatever they want and they and the mega caps have to buy if suddenly they're the only buyers and there's probably some Chinese buyers and some other buyers across the world but for the most part it's just the me the American based Mega caps there will not be enough demand to fulfill the the or to meet the supply diand uh Supply demand imbalance to effectively create above 70% margins so now this becomes a game of where do you think margins land because let's say margins fall from 80% to 60% that's a 25% drop relative basis right 20 divided by 80 is is is 25% you follow that math if that's true they need to they need to earn 25% more Revenue which is roughly uh just under uh about seven sorry it's it's what 7.5 billion do is what they need to earn uh to effectively create the same level of eps on a margin B for because their gross margins have decreased by 20% so the revenue growth looks even worse or less sorry it doesn't look worse it looks less attractive when you have the fact that margins are coming com down and listen I've been I've been beating this drum since March that like these margins are unsustainable these margins are unsustainable these margins are unsustainable like everyone in their mother knew it it was just a question of when do you think they they were going to roll over and in fact like they might not roll over or they might not roll over that that severely as much as I think or as much as some of as as as severe Bears think and I'll be very clear I have no position in Nvidia I've mentioned this repeatedly I haven't had a position in nid since last year uh I just you know I just kind of pay attention to the video because it affects the the relative pnal against the S&P 500 right as it is the third largest component so it it becomes this question of you know what do you think that the gross margin number should be Intel historically I'm talking about like when intel was God King Intel they historically had low 60% margins it was like 60 61% 62% fell into high 50s it was a bad quarter so let's just say that's why I'm using the 60% number for NVIDIA let's just say Nidia gets there the revenue growth is not great enough to offset that loss and then you start getting into a valuation issue um kind of sim a little bit similar to crowd strike but not exact again you know the the the number a lot of Nvidia Bulls throut is oh it's 35 times as cheap for NVIDIA okay fine let's let's let's work with that they're going to do about $280 is to 85 C this year in the next 12 not this year the next 12 months okay if you take just their fiscal year 25 or their calendar year 25 earnings which is basically you know all of next year that number probably pushes up to $2.95 to $3 so let's use $3 just cuz it's easy math so $3 * 35 is is 3 * 30 is 90 3 * 5 is 15 15 + 90 is $105 okay that gets you basically here okay gets to the lower bound of this channel um this is the downtrend it's been on uh since since the alltime high we'll get to that in a second so you start Wonder or you start thinking about the fact that uh you know that's probably your let's call it Pivot Point um it's going to get to below $110 because it needs to see if there's real buyers down there uh not just options buyers trading the stock up and down but real buyers trying to Fig to to at that 35 times and they think it's going to do not just $3 next year but really it's going to do $4 next year cuz now $4 was at 35 times now you're talking about a stock that should trade at uh you know what 4 * 5 is 20 so now you're tra talking about a stock that should trade at $140 again if it gets to that $4 an EPS because because the margins are going to hold up again if you assume 70% margins and your revenue is growing at 8% that Revenue offset will only take a quarter to or that one grow one quarter of growth to offset the the 10% or the 12% margin reduction or slightly more than one quarter uh but then by next year you're talking about stock that's doing $3.50 of earnings $360 earnings $3.7 of earnings uh in terms of next 12 months expected earnings number and suddenly you know at $105 is a very cheap stock so I'm not sure like I'm going to be honest I'm not sure because I don't have a really strong opinion on what I think their their their uh long-term gross margin num is going to be historically it's been in the 50s like that's been the the the higher end of the range so yeah yeah um on a technical perspective and again I'm not a tech chartist I we just look at charts because they're fun to look at while we while we talk stocks um this is the third I mean the move down unless it rips up uh uh right away um it's it's it pretty much confirms that this is another high lower high so we've got three lower highs in a row um we potentially you know now we need to figure out if we're it's going to make a a lower low uh which it you know it did here so it might go down to you know 87 or does it you know stop around the $105 range and make a a higher low and now it's now it's kind of creating a triangle and it's got to figure out which way it wants to go which is either down or up right sorry for the the sketches if you guys couldn't follow that but basically if it stops at $105 it's still not re like extremely bearish but it's a bullish but it's more bullish than if it doesn't stop till below till it gets to like the 200 which is it might meet around $90 a share uh by the time it gets there assuming it doesn't get there like tomorrow which who knows Nvidia is a CR moves Nvidia moves at the speed of sound it seems like um the other thing to note with Nvidia and this and I mentioned this before historically when it meets the top end of its cycle and I and again full disclosure I thought the top end was going to be in March uh but when it meets the top end of the cycle it historically retraces 50 to 70% of the move from the low to the high uh 50% 7% of the move gets you to about $70 a share okay not that like $70 a share so I don't know that's probably your more midterm Target historically takes about nine to nine months to six quarters uh so three to six quarters for it to hit that uh so we're in like we're basically just finishing the first quarter uh we're at two and a halfish months so realistically you're talking about May June July uh maybe even as early as April um uh maybe as late as next October in terms of hitting that low of 70ish dollar a share if not lower so my sense is that if if you assume this becomes a margin story which I do assume that uh because again I think that's what the Market's going to start focusing on now that it kind of has a better grasp the buy side has a better grasp of where the revenue numbers are going um it's going to become a margin story to project where they think it is and I think it's just going to diminish the volatility in Nidia which is going to be kind of interesting because Nvidia has been volatility capture tool for for for the short vix people but that's neither here nor there um the the interesting part is just okay where do you think that margin number goes and if you don't think it goes if you think it doesn't stop till 60% again you're looking at a stock that probably should trade into the low 80s uh or high 70s um but again it might not get there it probably won't get there tomorrow I don't think it will but again n video Moves extremely fast uh but it's just something to pay attention to uh the other thing to pay attention to and this is just more broadly and why nid is kind of important is just like the level of um the level of uh uh just cont or control or uh what's it called I'm sorry it's late in the after late in the evening or it's in the evening for me uh a level of uh I apologize it's the the word it's they're all they all all the mega caps kind of trade in line with each other or not not perfectly but they they all move together like like Amazon is breaking below 2008 again and Nvidia now missed so is Amazon going to make a lower low at $150 I'm not sure uh you know uh you know you can talk about Apple you can talk about Google which I kind of like here it's you know I mentioned that it entered a buy Zone uh it's it's broke up to 170 and it looks it's looks dead than a door nail now since since the since that 170 Mark like does it go visit the 200 day at 150 you know meta is arguably the uh uh the real beta of this Market um outside of Nvidia if you exclude Nvidia like this the stock that hit an all-time high barely but this this $530 Mark which was the resistance back from April every time we get above that We Sell aggressively like does this keep selling off and now we go revisit and instead of it making a series of higher lows it's finally going to break this uptrend and now we're going to go see and retouch the uh prior alltime high at $380 like I don't know I I don't I like so this is kind of the the the dangerous part you know as a market participant like these Mega caps can't I mean they have a couple times so far in the last six weeks but they can't like can sell off aggressively without taking the rest of the market with it you saw that in April I not April early August where eventually that that the the selloff in the in the semiconductors AI space and then uh the tech space eventually floated to the rest of the market like that will happen again if they sell off again I'm not sure I will say this though and and this is pro this is I'll leave you guys with this by the way hit the like And subscribe button down below um we're almost at uh a th000 subscribers uh but I do think that uh if we've reached Peak margins for for NVIDIA and again 80% margins is obscene and it's just it's hard to to continue at that rate because it it just speaks to a very severe problem in the Dynamics of the or in the supply Dy demand Dynamics but if we've reached the peak uh demand it's likely we' we've hit the peak uh stock price at least near term like Revenue has to be materially higher than $30 billion uh for us to have EPS growth and like again they announced a $50 billion buyback that's a rounding error for them I mean it's a 1% 1.5% buyback right now I think with the stock price falling it's like 1.7 uh so you're not looking at something that's like going to really move the needle in terms of earnings and that's assuming they buy back uh the entire value of of the shares in one quarter they're not but they kind of it seems like they kind of threw that on there because they knew the street was expecting a bigger number and they didn't hit it Jensen's been selling that's another bearish sign uh this is just not pointing to a a stock that like you really want to be extremely long or you want to be chasing that being said if it gets to $95 by like let's say early to mid next week I'm buying calls like we're going to do we're going to play basically play the same game all over again where it's like it just can't Nvidia just cannot stop and help itself it's going to fall down like this and then immediately bounce up to the $115 mark because it just it just cannot help Itself by just like like overshooting to both the bottom and downs like the most bearish thing it could do would be just take its time and then into mid November it just gets to to the to the high 80s like it just grinds down and just Burns Burns both calls and puts uh and just doesn't Mo doesn't really move like that's the most bearish thing Nidia can do because it just means there's less then then it's going to turn off people and there's going to be less interest in the options Market the most bullish thing that weirdly enough they can do is just immediately rip down to like $110 uh where where the 50-day is or the 100 day excuse me and then immediately rip back up um it's just like fine you know we've explored the D botm no uh congratulations Bears you had 5 Seconds to decide if you want to go long you missed your chance again we're going back to $140 like that's probably the most bullish thing Nvidia can do so you know keep an eye on Nvidia if you want to go long uh the levels are 110 and then uh 116 110 uh it's not it's not just the moving averages there's gamma levels at 110 and 116 uh and then it then it becomes a buy below 95 which is you know where the um uh support resistance Line is now the it it negates that if it gets below the 200 day just so you're aware so you buy it here in this circle if it keeps falling you sell and you just kind of ignore it until until it gets to you know 70 or $50 which is the the two levels it would historically hit based on or hit based on historic pull Downs so anyways click like And subscribe button down below this is Sleepy Soul hope you guys enjoyed this video talk to you all soon peace