It seems rather overvalued at this price. Even on an earnings beat, they'd need to give VERY optimistic guidance to drive it significantly higher, because at .22/quarter it isn't really worth even 20, let alone more, without anticipated fast growth.
I say that on an earnings beat, unless out of this world, it will probably more or less hold. If they meet expectations, it will sell off some (profit-taking on the recent run-up), and if they miss, it will tank hard. The advantage definitely seems to be on the short side. (No, I'm NOT making any predictions about earnings. I'm just talking about where the odds are better if you don't know how earnings will go.)
Why do you believe that I believe something I didn't say I believe? I don't think you understood what I was saying. I was very clear that I WASN'T making any predictions regarding the earnings report, one way or the other. What I was saying regarding fast growth is that in order for the price to surge, you would need an earnings beat *and* very optimistic guidance, because an earnings beat of a few cents wouldn't be enough to drive it up.
However, having clarified that, I'll also add that CSCO's pessimistic guidance should have been a hint that you shouldn't expect any spectacular predictions for the future. NVIDIA is not an up-and-comer, it's a market leader in a pretty steady niche, so it's not likely to have growth that greatly outstrips the computer hardware sector.
Anyway, so far the market agrees with me. In fact, they did report .22 EPS, and as I expected, with that kind of beat, it's now back to where it closed. I wouldn't be surprised if over the next 3 hours it cuts into the day's gains, at least partially.
I'm not worried. They should be worth pretty close to what I paid for them, right near the end of the day. Maybe a small loss, maybe a small gain.
I took a shot, it was worth it. In fact, the market reaction proves that my reasoning was sound, in that the trade's advantage relied on the upside risk being minimal, because even on a 15% beat it wouldn't move up. In fact, it looks very likely that it will finish the AH session with the day's gains coughed up. Had they met expectations, we'd probably be at around 19 now, and if they had missed by 2-3 cents, I bet it would be below 17. So, right idea, but I didn't win this one.