To The Moon

This article is a continuation of previous article : [1/2] How SoftBank's $5.83B Sales Interacts With NVIDIA’s Upcoming Earnings. Due to the limit of 20,000 characters. In this article, we will discuss how SoftBank’s $5.83B sales would interacts with Nvidia’s upcoming earnings. Since the exit adds a new dimension to the story, it affects how the market will interpret NVIDIA’s upcoming results. Here’s how: Elevated Expectations + Higher Scrutiny NVIDIA is widely expected to report strong numbers for Q3 FY26: consensus revenue around US$54.6 billion (or up ~56% year-over-year) and EPS around US$1.25. Some analysts expect even more: for example, one expects revenue of US$56.8 billion and bullish guidance into Q4. With this exit, the market may treat the upcoming earnings as a test: strong numbers may reaffirm NVIDIA’s platform leadership; anything less (or guidance thinking in terms of slower growth, margin pressure or inventory risk) could lead to a meaningful re-rating. Valuation Re-risked / Narrative Under Pressure The exit emphasises that valuations are in focus: SoftBank’s move is being interpreted as “maybe the upside from NVIDIA is less than before”. That means NVIDIA may need to deliver more than just “good” numbers — the story must show sustainability, margin leverage, widening moat. If it only meets estimates (rather than beating) or issues cautious guidance, the market might react more negatively than usual. Indeed, one commentary says “merely meeting estimates probably won’t be enough”. Focus On Guidance & Ecosystem Signals Because investors may infer that large money is reallocating elsewhere, NVIDIA’s forward guidance, comments on customer demand, channel inventory, and ecosystem positioning will be under heavy scrutiny. Areas of interest: Are hyperscalers, cloud-providers continuing to accelerate spending? How much of NVIDIA’s growth is still tied to its GPU/accelerator platform vs emerging competition or slower cycles? Are margins (especially data-centre) improving, stable, or facing headwinds (components, energy, inventory build)? Any signs of slowing growth in large customers, delays in orders, or inventory risk (which have tripped up other AI-hardware plays)? How the company speaks about broader AI ecosystem (software, models, inference, edge) — because SoftBank’s move suggests capital may shift to those. Sentiment Risk & “Crowded Trade” Factor If some large investors are signalling a move away from hardware chips toward ecosystem plays, then NVIDIA could be more exposed to sentiment reversal. If the broader AI/semiconductor market runs into a “pause” or rotation, NVIDIA may face pressure even if its fundamentals remain strong. The exit adds a psychological dimension: even though NVIDIA is still strong, the question becomes “are we already pricing in future growth?” The margin for error narrows. What To Watch In The Earnings and how to interpret it Here are specific metrics and commentary I think we should focus on in the upcoming earnings release (and subsequent call) — and how to interpret them given the SoftBank exit context: Metric / Disclosure What to look for Why it matters Revenue by segment (Data Centre / Gaming / Professional Visualization / Automotive) Especially growth in Data Centre (the “AI infrastructure” part). Since the market worries about hardware saturation, strong growth in the most strategic segment helps reaffirm the platform narrative. Guidance for next quarter / full-fiscal year Is the company raising guidance (beat-and-raise) or being cautious? A beat + raise would help reassure given rotation risk; a cautious tone might amplify concerns. Gross margin & operating margin trends Are margins stable/improving or compressing (due to competition/components/inventory)? Hardware models often face margin erosion; if margin trend is weak, it undermines the premium valuation. Customer Commentary / Demand Pipeline Any mention of delays, inventory build, softer hyperscaler orders, or conversely acceleration of spend and new applications (inference, generative AI, edge) Because SoftBank’s pivot implies belief the ecosystem play might be more fertile — NVIDIA needs to show it’s not leaving hardware behind. Inventory and Channel Check Are units moving or piling up? Hardware cycles can trap companies with inventory risk; if there’s a slowdown in customer rollout (e.g., from large cloud providers) that would be a red flag. Software / Ecosystem Revenue (if disclosed) & Margin Is NVIDIA showing growth beyond hardware? The exit hints that capital might flow toward software/AI stacks; if NVIDIA materially grows its software/middleware business, it strengthens its story. Capital Expenditure / Capex / R&D Commentary Are they increasing spending to stay ahead (next-gen GPU, AI infrastructure, partnerships)? Signals commitment to future growth and moat; if they pull back, the story could weaken. Likely Scenarios & Implied Market Reaction Given the above, here are two possible outcomes and how the market might react, especially in light of the SoftBank exit narrative: Bullish outcome: NVIDIA reports a strong beat on revenue/EPS, raises guidance (or keeps it very bullish), says data-centre demand is accelerating, margins improving, inventory healthy, software/AI-ecosystem business growing. → In this scenario, the SoftBank exit may be shrugged off as a strategic reallocation by SoftBank (not a negative signal). The story remains intact. NVIDIA shares could rally, perhaps materially. Cautious or mixed outcome: The company meets estimates (rather than beats), gives cautious guidance (or says inventory/channel issues / softer cloud spend), margins come under pressure, or software/AI‐ecosystem growth is less visible. → Here, the SoftBank exit becomes a headwind rather than just a footnote — market might interpret the exit as a signal that large players believe hardware growth is peaking. The stock could decline even if results are “good” but not “spectacular”. Our View & Takeaway For Investors I believe the SoftBank exit raises the bar for NVIDIA’s upcoming earnings. It shifts the risk-reward: upside remains, but downside risk (or slower growth risk) is more pronounced because investor patience is perhaps lower. For an investor: If you hold or are considering NVIDIA, pay particular attention to the forward guidance and ecosystem commentary — the hardware story has to still look robust. For those considering an entry: There may be an opportunity if NVIDIA surprises, but also a higher potential for a pull-back if results are “just good” rather than great. One tactical approach: Monitor sentiment leading into the earnings release — given the exit news, the market may be primed for rotation away from hardware platforms. A strong beat could lock in narrative; a weak one might trigger a rotation from NVIDIA into downstream software/infrastructure names. Currently, the overall sentiment for investing in $NVIDIA(NVDA)$ is positive, according to data from the top investing forums. NVIDIA has a sentiment score of 78 out of 100. This is slightly up, compared to the 30 day moving average. NVIDIA overperforms a majority of its industry peers when it comes to Sentiment, ranking in the 78th percentile. Appreciate if you could share your thoughts in the comment section whether you think Nvidia upcoming earnings release would not show much impact from SoftBank’s sales of its shares? @TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts. Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.