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In the next 48 hours, Nvidia is going to report earnings on May 20th. And this is going to be absolutely wild for investors. You better be ready right now, because what we're going to get from Nvidia is going to affect the stock price more than many investors can even understand. So, I'm going to discuss what you should be aware of going into earnings and what I am doing with my Nvidia shares.
A lot of retail investors right now, they keep trying to find the next Nvidia. But they don't really understand that Nvidia, the original trade, may still be in the early innings and there's so much money. There is bicep over tricep money. There's piles of cash that investors can make from Nvidia if the earnings is going to come out positively, which based on history is pretty much going to be the case.
Now, I need you to understand a few things going into earnings so you can play it accordingly. Before I get into that, something that I noticed that I want to bring to your attention is that many investors are chasing the next hype AI stock. But I want you to get back to the basics. Nvidia has remained my top AI pick.
It's already up about 20% year-to-date. Year-to-date over 20%. This stock was trading for, you know, $170 per share and now it has exorbitantly gained value to over $200 per share. And this is the new support level that I see. Nvidia is currently trading for 227 and I would not be surprised to see this stock make another leg higher.
I'm saying this because I don't want you getting caught up chasing speculative names. I want you to get back to the basics and understand that Nvidia is still the AI infrastructure play. Now, what I want to do to paint this picture and before I go into all the details, I want you to watch this clip from Cancer Fitzgerald, semiconductor equity research analyst on Nvidia, and then we will discuss the stock positioning and option positioning to hold into earnings.
What do you expect on earnings next week? You know, we're going to get the same kind of beat and raise and, you know, the market for the last kind of year has been ho-hum to that. Um I do think there are two things though um to focus on. Number one, uh I do think they will announce um a share buyback.
Uh they alluded to it in March uh and, you know, we've done some work on this where if you're over a hundred billion dollars and you announce a buyback greater than 5% of your outstanding shares uh and I think they will do so, um typically, you know, on average, you've outperformed the S&P by 10 points in the next 12 months and 15 points in the next 24 months.
So, I think that will be important. Uh and then the second one I think is really critical here is that compute is sold out. TSMC is one of the bottlenecks and Nvidia the most share of TSMC. And so, while the market is worried about competition to Nvidia, I would highlight that they will outgrow everyone because of that relationship uh with TSM.
Yeah, I was just going to ask what what will make this quarter different than others when they when they beat and raise and the market's kind of lackluster about the about the response. The stock has really taken off lately, but it's it's been in periods of stuck relative especially to some of these other chip names like the memory stocks.
Yeah, no, you're 100% right. I mean, we've lagged for 9 months. We've just started to catch a bid. I would tell you long only are are underway to the benchmark. Uh and so, I think if you get a catalyst like a buyback to start getting shares moving higher, I think uh there will be investors chasing it.
Uh and you know, I would highlight that, you know, Nvidia right now is trading 15 times, you know, what we think they'll earn next year making it, you know, the cheapest name in our coverage. Uh and so, we would wholeheartedly be buying it into earnings after earnings uh and throughout, you know, '26 and '27.
One of the biggest points made was that Nvidia's trading for around 15 times next year's earnings potentially making it one of the cheapest names in the semiconductor space relative to growth. Now, if Nvidia continues to compound earnings through AI training inference, sovereign AI, robotics, enterprise AI, this 15 times next year's earnings is honestly super cheap.
In today's valuation, could eventually look absurdly cheap down the road. 15 times earnings, guys, I don't think you understand. That is a value for many regular S&P 500 stocks. Now, Nvidia is an S&P 500 stock, it's the largest one. However, at the rate that they are ex panding and growing, I think 15 times earnings is going to really reward investors.
Now, here's also another angle that almost nobody's discussing. A 5% buyback, which is what the analyst was, you know, mentioning, that announcement from the company sitting at over $100 in cash would be an absolute game-changer, absolutely. Now, why? Because it would signal management still believes the stock is undervalued even after the AI rally.
More importantly, a buyback this large would reduce the share count while AI earnings could explode much higher. That would create a very powerful dual engine, a double engine effect, okay? It's like the right bicep and the left bicep. What would happen is earnings growth from the business itself is going to be very valuable and juicy, right?
But the second engine is EPS growth from fewer shares outstanding, okay? What this is is essentially financial engineering, okay? The stock is going to likely go higher because earnings is growing and the share count is is shrinking. So, it's basically a double engine here, right? So, most investors still think that, you know, Nvidia is just a chip company, but they are going to grow earnings much faster, they are going to reduce their share count much sooner than most investors really understand how that even works, the financial engineering side of things.
But the most important thing is is the value is going to grow, okay? The current price, you know, we're at all-time highs, doesn't really bother me, it doesn't really matter because what's to come is going to be more impressive and the expectations are not built in, in my opinion. So, Nvidia is becoming the core operating system of the entire AI economy and the company is building the full AI stack.
That's what makes it such a, you know, powerful revenue machine, a powerful cash flow system is because they have chips, networking software, AI operating system, uh robotics infrastructure, autonomous driving systems, and AI factories. And the craziest part is demand is still accelerating. Okay, the largest companies on Earth are now in an AI arms race.
Microsoft, Meta, Amazon, Google, OpenAI, xAI, these companies are spending hundreds of billions building AI infrastructure and almost all roads will still lead back to Nvidia. Because if you understand this, then you won't make any mistakes with Nvidia should they have a bad earnings quarter, which I highly doubt, but nothing is impossible.
Stock market's volatile and risky, right? So, why do I believe that they're going to be and this is pretty much the best play in the market right now that no one's really talking about cuz it's not as popular, it's not getting any YouTube views, but I'm going to put it out there the way I see it because I want you to make hand over fist money.
I want you to. The reason is because CUDA became the industry standard. What matters massively because the real moat is not just the chips, it's the software ecosystem. Once developers build an entire AI system on CUDA, switching away becomes extremely difficult, expensive, and risky. Nvidia locked itself into the center of the AI economy years before most investors fully understood AI.
This is why the company is the most valuable company in the world and it's about to become more valuable. Now, Blackwell is taking things even further, so The has been described as overwhelmingly bullish as hyperscalers race to secure supply before capacity disappears. This matters because AI is no longer experimental.
AI is infrastructure. Just like electricity, just like cloud computing, just like the internet itself. Okay, I don't like the data centers with the impact that they have on the ecosystem, whatever, but from a money perspective, it's pretty clear, man. It is It is clear as day. Every AI model requires training, inference, networking, memory, power optimization, and Nvidia's literally in the middle of all of it.
So, as an investor, this is the most important stock to look at. Not the hype stocks, not the smaller riskier stocks. No, Nvidia sits directly in the middle of everything. Inference, training, built the AI models. Every single ChatGPT prompt, every AI search, every AI agent, every AI generated video, which is like everywhere now.
of people can't even spot it. Even I get tricked by them sometimes. They require compute, and compute requires Nvidia. The market has realized, but it continues to wake up and understand the real value that Nvidia is about to generate. And this temporary spending cycle that a lot of analysts are saying, "Oh, we don't know if the spending can continue." Oh, man, it's going to continue because the world is just going digital.
It's going AI. That is the direction, and Nvidia is at the center of it. That's not going to change. I'm telling you, mark my word, this is not going to change. And the Canaccord Genuity analyst basically had a $350 price target. Is he correct about that? I can say with 99, something really huge percentage, I can say, in my opinion, I'm almost certain that Nvidia will be 350.
It's really not a question of if it will be 350, it's just a question of when. Will it be this year? Will it be next year? Well, as a long-term investor, I don't care too much. I am just in the trend and betting on what is most likely and most probable to happen. So, when you understand all the revenue-generating opportunities Nvidia has in front of it, the bull case becomes very simple.
If AI becomes as important as as investors believe, as important as the trend and the facts are in the market, then Nvidia will eventually reach $350 per share like the equity research analyst has as a price target. It doesn't even require a degree or equity research. These guys are wrong all the time, by the way.
It doesn't really require all that knowledge. You just have to simply see where the revenue trend is going and look at the earnings per share, understand the company's going to do financial engineering, and lower the amount of shares existing, and just understanding that 15 times forward earnings is a good price for Nvidia.
Okay, given that analysis and that viewpoint, what can I do with Nvidia stock? Well, simply, if you were just a stock investor, I would hold it. I would hold it going into earnings. But, if you were an option trader and someone that wants to get into option trading, then let me show you an interesting position that I am personally going to do.
So, I'm going to go to trade options on Nvidia. And one of the smartest ways to basically play Nvidia, there's a lot of ways. The riskier way would just to be to buy call options because usually in earnings, the stock at all-time highs got here because it continues to win. It continues to beat earnings and the stock continues to go up.
So, based on history alone, the stock is likely to go up. Okay? A riskier investor would buy call option. Now, a safer investor, someone that, you know, is more interested in long-term investing, wants to acquire shares of a high-quality company, and you know, do so for a cheaper price than the current market, would just sell put options.
Okay? So, I'm going to sell a put option. And Nvidia's currently trading for $227 per share. That is pretty much near all-time highs, right? If we look at the technicals here, all-time high was right around 234. I think we're going to bridge that, okay? But, I'm going to go about this the safer way.
So, for me, it's not about hitting home runs. It's not about, you know, my portfolio is at $4 million and I continue to take money out of it. If I were to add back all the money that I, you know, took out of it, I'd be well over 5 million. So, my portfolio has done very well to help me be in retirement.
My portfolio value is not changing because every time I hit 4.2, 4.3, I just withdraw 50, 100k and then I donate some of that. I, you know, live on that, etc. So, I've done extremely well and I'm saying this because I think anyone can do extremely well investing in high-quality companies and selling options.
I think that's one of the best strategies for a long-term investor that, you know, doesn't want too much volatility. So, what I'm looking at doing is simply selling a put option. I'm going to go for, look, usually I go for monthly option. However, Nvidia has earnings in just a couple days. So, you know, I could do a shorter-term option.
Let's go for a shorter-term option. Let's make it a little bit more fun. So, if we use a shorter-term option, this option still captures earnings, right? So, um May 22nd would capture it in the earnings on May 20th and the stock is going to have, you know, a decent amount of volatility. That's why an at-the-money option, right here at 225, um an at-the-money option just referring to an option strike price that is near the value of the stock.
Now, why, in my opinion, I I think it's fact, but why is this better than just buying the stock? Well, if the stock rises a lot, yeah, it's going to be better just to be a stock investor. However, if you sell a put option and the stock goes sideways, down, a little bit up, in many, many scenarios, you will end up being better off.
The only scenario where you were not better off is if the stock skyrockets, which it can. I think it will make a leg higher, but I already have Nvidia shares. So, this strategy that I'm showing here with this option strategy is really to acquire more shares or to build a new position if you're a bit scared to just, you know, own a lot of shares or if you just want a dollar cost average, etc.
This is a fantastic strategy. So, what I'm doing is 225, okay? The delta is very high. That doesn't matter. A high delta just means that there's a high chance of getting assigned, okay? There's a high chance of this happening. There's almost a 50% chance of this happening. So, the option market, you know, does have a skew, which means that, you know, you can see if call options or put options are more valuable, but at the end of the day, the market is pretty random.
And because it's random, an at-the-money option is going to have a delta of roughly 50, okay? So, there's about 47% chance, almost half, that Nvidia will be 225 or lower um by May 22nd in just the next 4 days. That's fine. I'm not trying to predict the market. I'm trying to benefit off of what's likely to happen, okay?
So, likely Nvidia will go up. It'll probably at least stay the same, and it will most likely not come down. But even if it comes down, this put option would give you more cushion than someone just holding the shares. Because look, if someone holds the shares and the stock goes down 10 bucks, they lose 10 bucks.
But $10 lower than Nvidia of $227 per share is going to be 217. The break even here is 216. You're You're literally getting an average cost of 216. But like, if I were to restate this in other words, why buy Nvidia 227 when you can buy Nvidia 216, right? So, if I sell a put option, the bid-ask here is really tight, it's really nice, 815 830, amazing.
And the volume is super high, it's stupid high, okay? Now, simply, I would sell this put option and then just wait and see. If it goes below, I'll get assigned and I will own Nvidia. And I want more Nvidia. Man, I'm itching. I'm like, man, I'm itching, I need more Nvidia. I need it. Uh I just don't have a whole lot of cash in my portfolio because I take out the money and
[snorts] yeah, I'm retired, so I'm using the money to to spend it, right? So, I'm going to execute on this. I'm not going to execute too big of a position, but as soon as the market opens up, I'm I'm to be selling 225 puts, and that is my entry. So, I'm probably going to do just one contract, which would be about collateral worth of $22,500.
So, that's going to be my $22,500, you know, hopefully new position on Nvidia. My The ideal case scenario is Nvidia reports earnings, they're good, but Nvidia ends up staying around the same level. And then I get assigned, and then in a couple weeks, 3 weeks, investors like, "Man, I really like this stock.
The The earnings are really good." And any like subdued behavior of when investors are not too excited, that doesn't matter. Stocks can go sideways for a good amount of time, and then just roar higher. Like you can see here, Nvidia was just A lot of investors were like getting impatient from January all the way, right?
You can see the stock has done nothing. It has a little bit of a upswing, but not much. From January to April. Literally, January, February, March. 3 whole months, 90 days. You know how many impatient investors were like, "Ah, man, this thing's not going anywhere. I'm tired. I'm not making any money." And I'm going to sell it.
I want something more hype. Ha! That type of impatient person missed such a massive gain. Psychology is super important if you're an investor. If you want to really level up, if you want to understand psychology, when to get in, more about timing and setups, and option trading, and how to generate income, that's what I specialize in.
I still have some more one-on-one coaching spots. I'd be happy to help you. I'd also be happy to have you on my group calls, on my Discord community. If you're interested in that, if you want to get yourself to the next level, this stuff isn't hard. You don't need bunch of fancy hype stocks. You don't need to get expensive coaching programs from all the top influencers who are getting hundreds of thousands of views.
Keep it simple. Uncle Henry got you. All right? So, go ahead, check out the first link in the description. Thanks for watching, and let's make some money hand over fist. Bicep over tricep. Let's get this money. I want you to succeed. Let's make it happen together.
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