Ahead of its third-quarter earnings report on Wednesday, Nvidia (NASDAQ:NVDA) incurred significant chatter, largely centering on whether it could again deliver stellar results. True to form, the semiconductor giant answered the question emphatically, inspiring analysts to lift their already lofty price targets. However, NVDA stock dipped on the news, aligning with moderately rising skepticism in the options market.
First, for a company facing legitimate inquires about sustained dominance in the face of headwinds such as President Joe Biden’s administration’s advanced chip export ban to China, Nvidia delivered about as strong of a print as could be hoped for. Specifically, the tech juggernaut rang up record revenue of $18.12 billion, up 34% from Q2. It also blew past the year-ago tally by 206%.
In addition, data center revenue clocked in at $14.51 billion, another record haul. This figure represented a 41% lift from Q2 and a blistering 279% increase from Q3 2022. Notably, GAAP earnings per diluted share landed at $3.71, up 50% from the previous quarter and more than a 12x leap from the year-ago quarter.
Explaining the results, Nvidia CEO Jensen Huang identified “the broad industry platform transition from general-purpose to accelerated computing and generative AI” as a core catalyst.
Analysts Pile Into NVDA Stock With Price Raises
Despite the robust Q3 print, NVDA stock conspicuously suffered a dip following the results. Per CNBC, some analysts pointed to demand sustainability concerns, particularly the aforementioned export restrictions. Notably, management remarked that the company will feel a negative impact from the policy decision in the current quarter.
Also, a general concern exists about how much speculative fuel can drive NVDA stock. As the business news outlet pointed out, Nvidia shares have more than tripled so far this year. With a year-to-date performance of over 240% at time of writing, NVDA is easily the hottest-running security in the S&P 500.
Still, analysts see even more upside ahead based on the latest financial results:
- Goldman Sachs analyst Toshiya Hari raised the price target by $20 to $625, due largely to strong demand and an improving chip supply chain.
- JPMorgan analyst Harlan Sur hiked the target by $250 to $650, citing the “massive demand pull” for Nvidia’s data center products.
- Morgan Stanley analyst Joseph Moore added $3 to the target to make it $603, citing possible reduced lead times in the supply chain next year.
Notably, analysts from Bank of America and Bernstein raised their price expectation to $700, citing greater adoption of artificial intelligence that should help mitigate China-related regulatory headwinds.
Options Traders Have Their Say
Unsurprisingly following the earnings disclosure, Fintel’s options flow screener — which exclusively filters for big block transactions likely made by institutions — showed major entities piling into bullish trades, mostly bought calls. However, some traders conspicuously decided to take the opposite side of the wager with bought puts and sold calls.
To be clear, it’s extremely difficult to determine exact motivations as the seemingly bearish bets could be a part of complex, multi-tiered strategies. Nevertheless, what’s interesting is that the put/call ratio has shifted generally higher (meaning more puts are bought than calls) for options expiring next year compared to options expiring this year.
Again, it’s not a definitive statement of a bearish pivot. However, it’s possible that skepticism may be influencing NVDA stock.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
