$NVDA Earnings Preview

hey everybody just wanted to jump on real quick ahead of uh earnings today for the big one n viia it's what we've all been waiting for uh real quick want to show you here my model why I'm above consensus but still not real bullish on the stock going into earnings um so even though I'm forecasting a beat I don't think the stock reaction is going to be that great um could be wrong but if you're long the stock I think having some puts uh to protect yourself to protect the downside um is the smart thing to do um going going into earnings later today uh so here look their they were uh their guidance was for 28 billion plus or minus 2% I'm expecting 4% growth um and honestly I I think the buy side uh might be even a little more bullish so uh really think the whisper number I think the whisper number is probably 29 to 29.5 billion um so I think for Revenue to really have a um for Revenue to move the stock meaningfully higher I think it needs to be I need I think it needs to come in north of 29.5 5 billion uh all that said um my earnings per share estimate for the quarter is 64 I've seen consensus estimates out there ranging from 58 to 60 cents um so if that if that holds true you know I am expecting a beat um in my model uh but all that said um I don't I don't think the Stock's going to move higher on earnings I'll tell you why it all boils down to valuation you know when I look at the other mag 7 most of the mag 7 I don't include Tesla in here but you know if I look at the other trillion doll um tech companies and how they're trading you know we can see here there's a real solid relationship um you know it's 85% correlation here looking at earnings growth and Peg ratios right nobody invests in a vacuum every investor has a choice to beong this stock beong that stock you know and and even if you're along both you know who's to say uh the waiting um for one can't be much larger than the waiting that you're long for the other and so everything's a trade-off and so I think it's really important to look at how um Nvidia is trading relative to its not not so much it's um chip peers but the other multi-trillion doll market cap tech stocks most of which are involved you know heavily involved with AI um but maybe not you know like for like comps um so yeah looking at at next 12mth EPS growth um you know Nvidia obviously has has you know some super high EPS growth estimates were at 58% but look the higher the EPS growth um you know the the the riskier the market thinks it is and so the the lower the PEG ratio the price to earnings growth price to earnings over EPS growth uh ratio is um and that's just that's not true just for tech stocks that's true across the board um but if you if you take a look at that regression formul and apply it to Nvidia stock it implies a stock price of $16 so basically Nvidia which is trading it's down about 2% today but at the open it was at 129 right that so it was implying uh as much as an 18% um overvaluation um that it was implying that it was overvalued by up up to 18% uh at the open this morning relative to the earnings growth that investors can get from other stocks that are its peers now you could say look Eric no one in their right mind owns Nvidia for its earnings over the next 12 months totally agree with you so looking at my model and the estimates that I have going out all the way to fiscal 2029 of course people in fiscal 2028 which is really 2027 uh calendar 207 but in calendar 27 people are going to be valuing Nvidia on fiscal 2029 earnings okay and on my model it's roughly 133% EPS growth by then on a on a company that I have forecasted look um 100% growth this year 47% growth next year moderating but I'm I'm looking at a 315 billion doll Revenue company in fiscal 2029 just you know these estimates aren't coming from someone who's bearish on Nvidia um but uh you know applying the regression formula to what investors would be looking at 3 years from now it implies a stock price of of $155 60 okay so in 3 years that's where Nvidia ought to be trading based on this regression which means you know you discount that at their weighted average cost of capital 12% that implies shares should be valued around $111 okay so net net you know based on on my valuation not consider ing Nvidia in a vacuum but relative to its peers um the stock is 14 to 18% overvalue um so again I think it's going to be really hard uh for the company to beat by a wide enough margin say anything substantive that can be Quantified as to its future that's going to get people more bullish on it than people already are um I think the valuation is pretty stretched here uh and so what I would do uh if if I was long Nvidia which I'm not and I'm not short either um I'm I'm not invested in Nvidia one way or the other I used to own it I sold it um if it gets back down um to these levels I'd consider buying it again um but yeah if I if I were you if I were long I would definitely think about buying some puts uh to protect myself from a potentially um you know 15 20% uh move to the to the downside over the next over the next couple weeks or month um at least into earnings you know it doesn't cost you much to buy some puts and you know if nothing happens great sell them sell them tomorrow after after earnings I think it really makes sense to uh protect yourself thanks everybody uh I'll be back with another video analyzing everything they said uh and with updated model estimates uh after they report take care