NVIDIA's earnings report is out! Can it reignite the AI rally?

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Earnings Options Strategy | NVIDIA Surges Nearly 20% in 7 Days to Hit Record High! Can the May 20 Earnings Report Continue the 'AI Boom' Legend?

$NVIDIA (NVDA.US)$ NVIDIA is set to release its earnings report after the market close on May 20, Eastern Time. Institutional forecasts predict that NVIDIA’s Q1 2027 (corresponding to Q1 2026 in natural year) revenue will reach $79.119 billion, marking a 79.56% year-over-year increase. Earnings per share are expected to be $1.749, reflecting a 130.12% year-over-year rise. The aforementioned data follows the US-GAAP accounting standards.

$NVIDIA (NVDA.US)$ NVIDIA has recently become the focus of the global capital market. Over the past seven days, its stock price has continuously risen, with cumulative gains nearing 20%, adding over $800 billion to its market value. Its latest market cap stands firmly above $5 trillion, just one step away from $6 trillion.

This rally was driven by two factors: optimistic expectations for its earnings report and a key policy shift during Trump's visit to China — ten Chinese companies were approved to purchase H200 chips. Market speculation about Jensen Huang accompanying Trump on his visit to China and NVIDIA’s potential return to the Chinese market increased, further strengthening bullish sentiment.

But with that comes questions:Can NVIDIA's earnings report continue to boost its stock price?

As a core asset in the global AI computing power industry chain, NVIDIA’s revenue growth, profit margins, order visibility, and management statements will all be seen by the market as a barometer of investment sentiment in US AI technology stocks. In other words, NVIDIA’s earnings report is not a standalone event but rather a concentrated test of whether tech stock valuations still have support.

I. Earnings Data: The Market Doesn’t Just Want 'Good,' It Wants 'Good Enough'

Wall Street’s consensus expectation for this quarter’s earnings report is: approximately $79.1 billion in revenue and an adjusted earnings per share (EPS) of around $1.75. However, several top-tier investment banks believe this forecast is overly conservative—Citi predicts revenue will reach $80 billion, about $1.4 billion higher than the consensus,mainly driven by better-than-expected ramp-up of B300 chip production;Wells Fargo & Co has raised its revenue forecast to $80.3 billion and its EPS forecast to $1.78, giving a highest target price of $315.。

The issue is that market expectations for NVIDIA no longer allow for just an 'ordinarily excellent' earnings report.

Therefore, the real threshold for this earnings report is a 'clean beat-and-raise':Not only must this quarter’s revenue and profits exceed expectations, but the guidance for the next quarter must also be strong enough to convince the market that the growth curve hasn’t slowed down. If the company only slightly beats expectations but faces margin pressure and offers conservative guidance, the stock price may actually see a pullback.

Gross margin is the second key variable. NVIDIA's gross margin in the previous quarter was 71.07%. Based on historical experience, during the transition period of the Blackwell architecture, gross margin may temporarily decline as the new platform absorbs higher input costs before yields normalize. Considering the numerous new features of the Vera Rubin architecture, the decline in gross margin could be more pronounced.

If the gross margin remains high, it indicates that NVIDIA still possesses strong pricing power and product scarcity; if the gross margin falls significantly below expectations, the market may reassess its valuation basis.

II. Sustainability of data center and AI demand

NVIDIA’s long-term value has long since evolved from being a GPU supplier to becoming the leading player in the full-stack AI ecosystem. In this earnings report, the market will focus on verifying the sustainability of its AI demand, with attention concentrated on three core areas.

1. Expansion by major clients provides a solid foundation, with structural upgrades in AI demand driving further expansion

The core driver of NVIDIA's growth comes from its data center business, andthe four cloud giants ( $Microsoft (MSFT.US)$、 $Alphabet-C (GOOG.US)$、 $Amazon (AMZN.US)$、 $Meta Platforms (META.US)$) are projected to have combined capital expenditures reaching up to $725 billion by 2026,providing a solid backing. These massive investments are primarily directed towards AI infrastructure construction, with NVIDIA GPUs remaining the top choice.

Current AI demand is expanding from large model training to inference and Agentic AI, with the latter consuming more computing power and having more dispersed requirements. The earnings report needs to confirm two major issues: whether the inference business can open a new growth curve; and whether AI demand is penetrating into enterprise-level, sovereign AI, and vertical industries.

2. Blackwell+Rubin dual drivers: Rubin's mass production process exceeds expectations, will the 2027 trillion-dollar target be raised again

CEO Jensen Huang previously predicted that the cumulative revenue opportunity for the Blackwell and Rubin platforms by 2027 would exceed one trillion dollars. Investors hope to see in the earnings report a clear path of converting orders into actual revenue, as well as confidence in this ambitious goal. Whether this target will be raised again during the earnings call is also a key focus for investors.

The Blackwell platform is currently the absolute main driver of growth.Citi expects that Blackwell will account for more than 70% of NVIDIA’s high-end GPU shipments by 2026. The market is highly focused on its production ramp-up, yield rates, and customer acceptance progress.

As the next-generation product line, the development progress and sample delivery status of the Rubin platform are forward-looking indicators for assessing the growth potential in 2027.Vera Rubin’s mass production process has exceeded expectations. On May 11, according to Taiwan's Economic Daily, NVIDIA finalized the mass production plan for Vera Rubin with its ODM partners.It is planned to enter the trial production phase in June and begin shipping to major North American cloud service providers starting in July.The list of first batch customers includes Microsoft, Google, Amazon, Meta, and Oracle.

3. Full-stack ecosystem moat: From GPU to AI factories, strategic investments build an ecosystem moat.

NVIDIA is no longer just a GPU vendor, but has built a full-stack ecosystem encompassing 'CPU (Grace) + GPU + network interconnect (Spectrum-X/InfiniBand) + inference chips (Groq).' Moreover, NVIDIA is leveraging its strong cash flow to make large-scale investments that deeply bind partners, constructing even more robust ecosystem barriers.

Since 2026, NVIDIA’s committed total equity investments have exceeded $40 billion. In the past two weeks, NVIDIA reached agreements with data center operator IREN and glass manufacturer Corning, gaining the right to invest up to $2.1 billion and $3.2 billion respectively. In this earnings report, the market will also focus on whether NVIDIA will further expand its investment portfolio.

Further reading: Gathering the three giants of Neocloud! NVIDIA splashes $2.1 billion to invest in IREN—what's the logic behind it?

III. Competitive Landscape and China Market Growth

With the explosive growth of the AI computing power market, customers’ self-developed chips and external competition are intensifying. The market is concerned about the erosion of NVIDIA’s 'moat,' and this earnings report needs to verify whether its barriers remain solid.The latest news shows that the US has relaxed export restrictions on the H200 chip, allowing sales to China to resume. This change is significant for NVIDIA’s revenue recovery and China market strategy and is expected to be discussed in detail during the earnings call.

1. Limited short-term impact from customer self-developed chips

Major clients like Google, Amazon, and Microsoft are accelerating the development of their own AI chips, attempting to reduce reliance on NVIDIA. While these self-developed chips won’t replace NVIDIA, they are creating a second-source model. Investors will pay attention to Rubin’s client order situation, particularly whether companies such as OpenAI, Microsoft, and Meta have confirmed order volumes for Rubin, thereby limiting their purchases of other chips.

2. China Market: Signs of easing export restrictions

Previously, US export restrictions to China continuously impacted NVIDIA’s business. However, during Jensen Huang’s visit to China alongside Trump,Reuters reported that US officials have officially approved approximately 10 Chinese companies to purchase NVIDIA's flagship AI chip, the H200.The approved list includes internet technology giants such as Alibaba, ByteDance, Tencent, and JD.com, as well as companies with distribution qualifications like Lenovo and Foxconn. According to US regulations, each approved company can purchase up to 75,000 H200 chips, either by placing direct orders with NVIDIA or through authorized channels.

Meanwhile, uncertainty remains high.Reuters noted that so far, no actual chips have been delivered, leaving questions about the implementation timeline, regulatory oversight, and the potential revenue scale from Chinese customers unresolved.

Despite policy uncertainties, the market views this as a positive signal of a possible easing in US-China AI chip trade, alleviating previous concerns over revenue restrictions in the Chinese market.Therefore, during the earnings call, investors will focus on CEO Jensen Huang’s comments regarding opportunities in the Chinese market, which may influence market sentiment more than specific figures.

Three, Earnings Options Strategy: Four Approaches for Different Scenarios

$NVIDIA (NVDA.US)$ Before the earnings report, options implied volatility (IV) rose to a relatively high level, with option signals indicating an expected stock price fluctuation of approximately ±7.48% on the earnings day.

The following four strategies are suitable for investors with different risk preferences:

1. Selling Put Options – “Discounted” Purchase of NVIDIA Shares

Investors who are optimistic about NVIDIA's long-term value and are willing to buy on a pullback may consider this strategy.

When implied volatility (IV) is high before an earnings report, sell put options with a strike price below the current stock price (e.g., 10%-15% out-of-the-money puts). If the stock price does not fall below the strike price, you collect the premium directly; if it falls below, you buy the stock at a 'discount'—essentially building a position at a lower cost. In a high IV environment, the premium income is more substantial, providing an additional cushion of safety.

2. Buy a straddle — betting on significant post-earnings volatility

ForInvestors who expect significant volatility after the earnings report but are uncertain about the direction may consider this strategy. Simultaneously buy call and put options with the same strike price and expiration date. As long as the stock price experiences significant movement (whether up or down) after the earnings release, exceeding the total cost of both options, a profit can be made.

It should be noted that, with IV currently at a high level, implementing this strategy may be costly. After the earnings report, IV typically drops significantly (known as 'IV Crush'). Therefore, the actual price movement needs to be large enough to cover costs; otherwise, smaller fluctuations may result in losses on both sides of the premium.

3. Bull Call Spread — bullish while controlling risk

This strategy is suitable for investors who are moderately bullish but worry about options expiring worthless and prefer not to make a single-leg bet.

Buy a call option with a lower strike price and simultaneously sell a call option with a higher strike price (same expiration date). This combination limits the maximum loss (only the net premium paid) while also capping the maximum gain. In a high IV environment, selling the higher strike call effectively reduces the overall cost of the position, making it a cost-efficient bullish strategy.

4. Long Put Hedge — insuring your position

Suitable for investors who already hold NVIDIA shares and are concerned about a potential pullback in the stock price after the earnings report.

Directly buy put options as 'insurance.' If the stock price plummets, the gains from the put options can offset losses in the held shares; if the stock continues to rise, only the premium is lost. It is recommended to choose slightly out-of-the-money puts to reduce costs and set the expiration date to cover 1-2 weeks after the earnings report to account for any delayed reaction. The downside of this strategy is that the insurance premium can be expensive, especially when implied volatility is high before the earnings report.

After the earnings report on May 20, 2026, will NVIDIA lead global technology stocks into a new round of celebration, or will it trigger significant market volatility at high levels due to being 'not perfect enough'?

What do fellow investors think?

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