Nvidia’s (NVDA) earnings figures are set to be published tomorrow , and as usual, the Santa Clara, California-based tech giant faces a very high bar—it needs to deliver a standout quarter along with strong guidance to impress the markets.

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From a business fundamentals perspective, explosive top-line growth and exceptionally high margins for a company of Nvidia’s size—one that continues to benefit from long-term secular growth trends—reinforce the bullish case. Especially since valuations appear significantly de-risked when adjusted for these long-term growth expectations , I fully subscribe to this bullish outlook and rate the company as a Buy.

That said, given Nvidia’s historically volatile stock behavior, short-term downward swings are definitely possible. For those looking to go long ahead of earnings, an options-based trading strategy could be the best approach. Meanwhile, several top analysts, including Rick Schafer from Oppenheimer and C J Muse from Cantor Fitzgerald , favor bullish positions ahead of tomorrow’s earnings numbers.

Nvidia Outperforms Despite Headwinds

As Nvidia gears up to report its quarterly results, it’s worth noting that in the previous quarter, the GPU powerhouse remained the most impressive performer among Big Tech. Nvidia posted a massive 78% year-over-year revenue growth , bringing in $39.3 billion, while its peers in the Magnificent 7 have struggled to hit even 20% growth.

Even if Nvidia’s surge has been driven almost entirely by explosive demand for its GPUs, adding $17 billion in revenue in just one year is a considerable achievement, especially for a company that sells hardware and has to navigate a far more complex logistics chain than software-based businesses.

What makes this even more impressive is that the top-line growth came with strong profitability. Despite supply chain headwinds, Nvidia successfully rolled out its new Blackwell architecture and still reported gross margins of 73% in its latest quarter. While that’s down from 76% in the same period last year and 74.6% last quarter, it’s still incredibly strong by any standard.

Naturally, when a company the size of Nvidia launches a next-gen chip architecture, especially one as advanced as Blackwell, there will be higher costs during the early production ramp. The good news is that this should be temporary. Nvidia’s management expects margins to rebound to the 75–76% range by the fiscal year’s end, reiterating that in their latest guidance.

Beating the Bar Isn’t Enough for Nvidia Anymore

The bar for Nvidia keeps increasing, especially after the company’s massive valuation surge over the past few years. Its recent performance has made it clear: it’s not enough for Nvidia to just beat estimates—it needs to beat them by a wide margin and still deliver guidance above what the market expects.

For fiscal Q1 earnings, Nvidia guided for $43 billion in revenue, representing a sequential increase of $3 billion, with a possible variation of ~2% and gross margins between 70.6% and 71%. The market consensus, however, is already leaning toward the high end of that range—$43.7 billion—essentially putting pressure on Nvidia to not just meet guidance but exceed it.

Since management expects gross margins to return to last year’s levels by year-end, anything above 71% could be considered minimally acceptable for a bullish reaction. Even if margins land within the guided range, that might still be defensible given that the Blackwell architecture is still in the early rollout. However, in the end, what will likely drive the most immediate market reaction is the guidance for Q2.

Analysts are expecting Q2 revenue of $45.5 billion, which implies 5.8% sequential growth from Q1’s guidance, or 51.7% year-over-year growth. Any number below that could disappoint investors, especially in a name as heavily priced for perfection as Nvidia—and it could trigger a sell-off.

To put that into perspective, based on Nvidia’s options chain , the market is pricing in a 7.8% move (up or down) around earnings. That’s derived from the at-the-money straddle (calls plus puts) set to expire right after earnings.

Over the past eight quarters, Nvidia stock has moved more than 6% each time. Unsurprisingly, the sharpest immediate drops came in Q2 and Q4, when short-term guidance disappointed.

How to Profit From Nvidia’s Earnings Rollercoaster

A simple strategy that aligns well with the high volatility expected for Nvidia post-earnings is the strangle, which involves purchasing both a call and a put option, out of the money (OTM), with the same expiration date.

For instance, with Nvidia shares trading around $131.29, a trader could buy a $135 call and a $127 put—both OTM. These typically come with lower premiums compared to at-the-money options. By comparison, the premium for the $131 ATM call is around $5.30, and for the $132 ATM put, about $5.50. Meanwhile, the $135 call is priced at $3.60, and the $127 put at $3.23. The total cost of the strangle would then be $6.83 per share, or $683 per contract (since each options contract represents 100 shares).

The reduced upfront cost makes this strategy more capital-efficient. However, for the trade to turn profitable, Nvidia’s stock must move significantly—either above $138.13 (call strike plus total premium) or below $120.77 (put strike minus premium). If the price remains within this range through expiration, both options may expire worthless, resulting in a maximum loss equal to the total premium paid.

That said, given Nvidia’s history of large post-earnings moves, a low-volatility or “limbo” scenario seems unlikely in my view.

What is the Nvidia Target Price for 2025?

Wall Street analysts remain staunchly bullish on Nvidia. Out of 39 analysts covering the stock, 34 rate it as a Buy, while only four suggest Hold, and just one recommends Sell. NVDA’s average price target is at $164.51 , which implies a solid upside potential of 25% over the next twelve months.

When Perfection’s the Goal and Volatility’s the Game

Fundamentally, the long-term bull thesis on Nvidia remains strong, with very few key points to criticize aside from some recent small margin deviations. The challenge is that Nvidia’s bar is as high as the operational quality of its business demands. So, if top-line growth doesn’t surpass guidance, gross margins show stagnation, or next quarter’s guidance falls short of market expectations, it tends to trigger short-term concerns.

That said, since volatility around earnings day is expected, a strangle options strategy could be a smart way to capitalize on big moves in the stock price while limiting initial costs and risk, especially if the market doesn’t move as much as anticipated.

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