Markets Are Still Nervous And For Good Reason

Still Bearish - Even If Nvidia Doesn’t Disappoint

So let’s review a few important themes that should matter..

• Nvidia Earnings!

• Labor Data Dates!

• Epstein Files Transparency Vote in Trump’s Hands!

Nvidia Earnings!

Ok, the expected move was <7% and premium sellers almost always win. The real reaction comes not afterhours or tomorrow but next week after the OpEx wipes clean all the short-duration calls - which Jason identified last week as “so bullish they are bearish” unless we get above $200, which I contend will be hard to do this year without a macro trigger.

Nvidia issues a strong forecast, easing AI-bubble fears.

• Q3 Adj EPS came in at $1.30 vs $1.25 est, up 60.49% YoY from $0.81. Revenue hit $57.006B vs $54.880B est, up 62.49% YoY from $35.082B.

• Results exceeded pre-release consensus for revenue of $54.9–$55.4 billion and EPS of $1.25–$1.26, implying a revenue beat of roughly 3.8% versus an LSEG/Reuters

• Data Center revenue up 25% QoQ, Gaming revenue down 1% QoQ, and Pro Visualization up 26% QoQ. Non-GAAP gross margin of 73.6% edged higher.

Jensen was particularly bullish: beat-beat-raise!

“Blackwell sales are off the charts, and cloud GPUs are sold out - compute demand keeps accelerating and compounding across training and inference — each growing exponentially. AI is going everywhere, doing everything, all at once.”

NVDA CFO on outlook:

We are not assuming any data center compute revenue from China.

To help compensate, no doubt... moments before NVDA earnings release:

Key White House officials are pressing lawmakers on Capitol Hill to keep AI chip export restrictions to China out of the annual defense policy bill, according to Axios.

And earlier in the day: more too-good-to-believe news moments before Nvida is to release earnings.

Humain to deploy up to 600,000 Nvidia GPUs in Saudi Arabia, U.S. in next 3 years

Let’s just say the AI train is still racing and has yet to go off the tracks.
But that doesn’t mean we should not look for breaks.

Without digging into the bear case too much this evening, I will offer up some ballast to the bullish Nvidia event:

1. Kakashii found some accounting discrepancy in that NVDA report: “From now on, revenue is counted based on where a company’s headquarters are, not based on the customer’s billing location. A perfect way to make inconvenient export flows disappear without touching a single supply chain.”

2. JG_Nuke also found some accounting discrepancy in that NVDA report: “Accounts Receivable grew by $5.58B QOQ. Take away growth in AR and Revenue misses by $3.49 billion. Another manufactured beat.”

3. Gary Marcus makes the case for GOOGL and not NVDA: “If Google were to make those TPUs commercially available at scale and reasonable price, Nvidia’s dominance would end, price wars would begin, and compute would become a commodity.”

4. Remember also that hedge fund manager Dr. Michael Burry is promising to release a detailed research report about Nvidia and hyper scaler accounting fraud using depreciation tricks to boost EPS on November 25th. “True end demand is ridiculously small. Almost all customers are funded by their dealers”

5. Someone else has been talking about this round-tripping since September 2023 but that it was not safe to short a ponzi but to keep asking the question, “Is the demand real?” (some twitter rando - namely me).

Now let’s get to the really important upcoming market-moving event risks…