Bullish Nvidia Traders Could Be Feeling Chipper After Earnings Beat

Earnings per share (EPS) came in at $1.05 adjusted compared to Wall Street estimates of $1.01 estimated, while revenue topped $46.7 billion versus consensus estimates of $46.06 billion. Much of that revenue ($41 billion) was derived from its data center business (56% higher than a year ago), which it expects to continue generating strong numbers in the current quarter. Q3 guidance mentioned revenue estimates of $54 billion, plus or minus 2%.

The semiconductor giant had a proverbial chip on its shoulder heading into Q2 earnings, with questions regarding its AI spending spree and whether its lofty $4 trillion valuation was substantiated. Notably, the company reported “no H20 sales to China-based customers.” However, it mentioned “a $180 million release of previously reserved H20 inventory” to a customer based outside of China. It will be interesting to see how its business with China plays out after it agreed to a 15% revenue split with the U.S. government.

Nonetheless, the long-term horizon appears to work in its favor. AI platforms should continue to require heavier processing power. That, in turn, should help maintain demand for Nvidia products for the unforeseeable future.

“Its GPUs, like the H100 and upcoming Blackwell architecture, are completely dominating AI training and inference markets,” a Direxion Xchange Newsletter noted.

But will that be enough to keep Nvidia from getting “overweight” ratings from analysts suspecting that its run could be over, especially if continued AI infrastructure spending isn’t enough to sustain revenue generation? If so, this could also leave the door open for other competitors in the AI space looking to knock Nvidia off its pedestal.

If traders think the bullish prospects of Nvidia will continue in the short-term, they can get double exposure via the Direxion Daily NVDA Bull 2X Shares (NVDU A-). However, if the euphoria from a positive earnings release falters or analysts see potentially bearish pressure after digesting the number more closely, there’s the Direxion Daily NVDA Bear 1X Shares (NVDD A-). For example, the stock fell on news that data center revenue fell short for two consecutive quarters. Regardless if the stock rises or falls, both products present potentially profitable trading opportunities.

If investors cast a stone into a lake of ETFs, there’s a high likelihood that stone will land on a fund containing Nvidia. As VettaFi investment strategist Cinthia Murphy noted, Nvidia is a ubiquitous holding in the ETF universe. Needless to say, many fund providers had their eyes fixated on what Nvidia would do after earnings were announced.

“In the ETF world, over 3.5 billion shares of Nvidia are held across over 670 ETFs, according to FactSet data,” Murphy said.

One of those funds is the Direxion Daily Semiconductor Bull and Bear 3X Shares (SOXL B), offering traders the ability to play the broader semiconductor sector as opposed to concentrated exposure to Nvidia. The fund tracks the largest movers and shakers within the industry, including Nvidia. For added diversification, the fund also adds exposure to other industry giants like Broadcom, Qualcomm, Texas Instruments, and AMD.

Nvidia’s earnings could also have ripple effect on other names, particularly those operating in the AI space. Other semiconductor funds to watch include:

• Direxion Daily PLTR Bull 2x Shares (PLTU ) / Bear 1X Shares (PLTD )
• Direxion Daily AMD Bull 2X Shares (AMUU ) / Bear 1X Shares (AMDD )
• Direxion Daily TSM Bull 2X Shares (TSMX ) / Bear 1X Shares (TSMZ )

Hyperscalers that use Nvidia’s or its competitors’ products to build out their AI platforms can also see some earnings spillover:

• Direxion Daily AMZN Bull 2X Shares (AMZU A) / Bear 1X Shares (AMZD )
• Direxion Daily GOOGL Bull 2X Shares (GGLL A) / Bear 1X Shares (GGLS )
• Direxion Daily META Bull 2X Shares (METU A) / Bear 1X Shares (METD B+)

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