Nvidia shares hold steady as investors brace for earnings release

Nvidia is set to release its quarterly earnings on Wednesday, 26 August, after the market closes. The stock has remained relatively flat in the lead-up to the announcement, closing at $214.72 on Friday, 21 August. This represents a 4.70 per cent decline from its recent closing peak of $225.30 recorded on 13 August, though the share price remains up 13.0 per cent from a recent trough of $190.01 on 29 July.

Since the last earnings release on 20 May, when Nvidia closed at $220.51, the stock has lost approximately $7 per share, or 2.62 per cent. This flat trading pattern over the last three months has prompted some market participants to consider shorting put options, a strategy that can generate income if the stock price remains stable or rises.

Analysts forecast revenue of approximately $92.07 billion and earnings per share of $2.09 for the upcoming quarter. This represents a quarter-on-quarter growth rate of 11.77 per cent, which is notably lower than the 67 per cent growth rate recorded in the year ending January 2026 and the 110.58 per cent trailing 12-month growth in fiscal Q1. The tempering of super-fast growth rates could impact the company’s high valuation, as the market remains sensitive to changes in momentum.

Despite the slowdown in growth, Nvidia’s forward price-to-earnings ratio stands at over 23 times, which is below its historical average. Analysts are forecasting earnings per share of $9.01 for the year ending January 2027. While the average analyst price target is approximately $304, the market reaction will depend heavily on the company’s free cash flow performance and management’s outlook.

Investors are advised to expect volatility following the results, with a risk of a "sell on the news" event if the figures do not significantly exceed expectations. Some investors are considering shorting the September 25 $200.00 put option, which offers a one-month yield of 2.24 per cent. This strategy allows investors to keep the income without having to buy Nvidia shares at the strike price, provided the stock remains above that level.

Projected free cash flow margins are estimated at 53.3 per cent, which could result in a fair market value significantly higher than the current market cap of $5.2 trillion. Analysts project revenue for the fiscal year ending January 2027 to be almost $400 billion. If the company maintains its projected free cash flow margins, Nvidia could be considered undervalued on a free cash flow basis, though analysts will evaluate this performance carefully.