Nvidia stock is falling despite the firm beating on earnings and revenue expectations and setting strong guidance. The Daily Breakdown looks at why.
Thursday’s TLDR
- Nvidia delivered another stunning quarter.
- But shares are moving lower this morning.
- Salesforce stock tries to clear tough resistance.
What’s happening?
All eyes were on Nvidia yesterday as it delivered its Q3 results. The firm beat on earnings and revenue estimates, with the latter surging more than 120% year over year.
However, more important than the results was guidance. Why? Because Wall Street cares less about what a firm did and cares more about what it’s going to do in the future.
According to Bloomberg, “Third-quarter revenue will be about $32.5 billion, the company said. Though analysts had predicted $31.9 billion on average, estimates ranged as high as $37.9 billion.”
Despite management’s Q3 outlook topping consensus expectations, shares are still lower this morning by about 4% (as of 8:00 a.m. ET).
But let’s take everything in context. Going into yesterday’s earnings report, shares were up 38.5% from the August 5th low. With that type of rally and with so much attention on the event, there was always the possibility that the stock’s immediate reaction would disappoint investors.
However, that doesn’t detract from the long-term trends we’re still seeing in AI.
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The setup — CRM
Salesforce may not get the same type of recognition as its mega cap peers, but it still stands tall with its $250 billion market cap.
The firm reported earnings last night and is tip-toeing higher in pre-market trading (more about the results in the next section below).
In fact, it’s trying to regain the key $265 level and the 200-day moving average, a key long-term measure of the asset’s trend.
From here, it’s pretty simple. CRM stock has struggled to clear $265 and the 200-day moving average, so active bulls want to see the stock get above this level and then hold it as support.
If it can, more upside is possible. If it can’t and shares fade back below this zone, the stock may struggle in the short term.
Options
Investors who are familiar with options may consider them for CRM. If shares hold above $265, then calls or call spreads may be one way to take advantage of a continued rally.
However, if the stock breaks down, puts or put spreads are one way to speculate on further downside.
To learn more about options, consider visiting the eToro Academy.
What Wall Street is watching
CRM — CRM’s Q2 earnings and revenue beat expectations as sales climbed 8.5% year over year. Despite Q3 guidance coming in below analysts’ estimates, shares are inching higher in pre-market trading as management maintained its full-year revenue outlook and raised its full-year operating cash flow outlook.
AFRM — Affirm shares are surging in pre-market trading, up more than 20% after the company reported a smaller-than-expected loss and better-than-expected revenue results. Further, strong guidance has investors feeling optimistic about more growth ahead.
CRWD — Embroiled in controversy since causing a global outage earlier this summer, a lot of focus was on Crowdstrike as it reported Q2 results, which beat estimates. The firm issued Q3 and full-year earnings and revenue guidance that was below analysts’ expectations, although the stock is only down slightly this morning.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.