NVIDIA’s AI Empire Reports Next: Double Down or Hedge the Market Reaction

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NVIDIA (NVDA) reports fiscal Q2 2026 earnings on August 27th after market close, with traders watching whether the AI computing leader can maintain its meteoric growth trajectory. The GPU giant faces tough comparisons after powering the generative AI revolution.

NVDA shares have gained 57% over the past year, crushing the S&P 500's 18% return. This outperformance reflects NVIDIA's dominance in AI infrastructure, though questions persist about sustainability as hyperscaler customers develop their own chips.

For active traders looking to attempt to capitalize on NVIDIA's typically remarkable earnings moves, Direxion's Single Stock Daily Leveraged & Inverse ETFs, launched in September 2023, provide tactical tools to trade the semiconductor leader's price swings without traditional margin requirements.

Q2 Earnings Expectations

Wall Street expects NVIDIA to report $0.94 per share in fiscal Q2 earnings, up 44.6% from the $0.65 posted in the same quarter last year. This growth, while impressive, marks a deceleration from the triple-digit gains of recent quarters.

The company has topped earnings estimates in three of the past four quarters, though it missed in Q1 when it reported $0.81 per share, falling short by 4.7%. That miss was attributed to a $4.5 billion charge related to new U.S. export restrictions on H20 products to China.

For fiscal 2026, analysts project earnings of $4.02 per share, representing 37% growth from fiscal 2025's $2.93. Looking ahead to fiscal 2027, estimates call for $5.34 in earnings per share, suggesting 33% growth as the AI boom continues.

Recent Stock Movement and Analyst Optimism

NVIDIA trades around $183, near its all-time high of $183.88 reached last week. The stock has shown remarkable resilience despite concerns about competition from AMD and custom chips being developed by major cloud customers.

Analyst sentiment remains overwhelmingly bullish, with 45 analysts covering the stock. The breakdown shows 39 "Strong Buy" ratings, 2 "Moderate Buy," 3 "Hold," and just 1 "Strong Sell" recommendation. The average price target of $182.60 actually sits slightly below current levels, suggesting some caution about near-term upside.

Market watchers highlight several challenges, including the impact of China export restrictions, potential supply-demand mismatches, and increasing competition. The company's ability to maintain pricing power as AI infrastructure scales will be crucial.

Key Factors for Q2 Results

Several elements will drive the stock's reaction when NVIDIA reports:

• Data Center Growth: Any deceleration in AI-driven data center revenue would spook investors given high expectations.
• H100/H200 Demand: Commentary on next-generation GPU demand and supply dynamics matter for growth visibility.
• China Impact: Updates on how export restrictions affect revenue and any workarounds or new products.
• Blackwell Architecture: Progress updates on the next-gen B100/B200 chips expected to ship in volume later this year.
• Customer Concentration: Details on hyperscaler spending patterns and potential custom chip competition.
• Margin Trajectory: Ability to maintain gross margins above 70% amid competitive pressures and product mix shifts.

Trading NVDA Earnings With Leveraged & Inverse ETFs

NVDA routinely experiences significant volatility surrounding their earnings releases, creating significant opportunities for positioned traders. Direxion's Single Stock Daily Leveraged & Inverse ETFs let traders amplify or hedge NVDA's price action.

For Bullish Trades: NVDU

Direxion Daily NVDA Bull 2X Shares (NVDU) allows traders to double their exposure to NVIDIA. NVDU seeks 200% of NVDA's daily performance, before fees and expenses, through financial instruments.

• Targets 200% of NVDA's daily performance
  • When NVIDIA rises 1%, NVDU aims for a 2% gain (before fees)
  • When NVIDIA falls 1%, NVDU typically drops 2% (before fees)
• Perfect for traders expecting blowout data center results or strong Blackwell updates
• AI infrastructure earnings often produce extreme moves
• Average daily volume: 596,000 shares
• Designed for active traders monitoring positions throughout the day

For Bearish Trades: NVDD

Direxion Daily NVDA Bear 1X Shares (NVDD) provides inverse exposure to NVIDIA without requiring short-selling*. This feature helps traders in retirement accounts where IRA and 401(k) rules prohibit traditional shorting.

• Delivers inverse (-1x) daily performance versus NVDA
  • When NVIDIA drops 1%, NVDD aims for a 1% gain (before fees)
  • When NVIDIA rises 1%, NVDD typically falls 1% (before fees)
• Valuable for traders worried about revenue deceleration or margin compression
• Allows retirement account holders to make bearish trades on NVDA
• Average daily volume: 17.9 million shares

Both NVDU and NVDD reset their exposure daily and work best as short-term trading tools rather than buy-and-hold investments. These products require active oversight and are designed for traders who understand leverage & inverse effects and daily rebalancing dynamics.

With NVIDIA at the epicenter of the AI revolution but facing growing challenges, these leveraged & inverse ETFs provide timely tools to attempt to capitalize on whatever direction the stock takes on August 27th.

*Short-selling is a trading strategy where investors borrow shares and sell them, hoping the stock price will fall.

To learn more about all Direxion's Single Stock Leveraged and Inverse ETFS, Click Here

Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stock rather than an index, eliminating the benefits of diversification. Leveraged and inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying stock’s performance over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will lose money if the underlying stock’s performance is flat, and it is possible that the Bull Fund will lose money even if the underlying stock’s performance increases, and the Bear Fund will lose money even if the underlying stock’s performance decreases, over a period longer than a single day. Investing in the Funds is not equivalent to investing directly in NVDA.

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.

Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning.

Leverage Risk –The Bull Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with NVDA and may increase the volatility of the Bull Fund.

Daily Correlation Risk –A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with NVDA and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to NVDA is impacted by NVDA’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to NVDA at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to NVDA increases on days when NVDA is volatile near the close of the trading day.

Daily Inverse Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with NVDA and therefore achieve its daily inverse investment objective. The Bear Fund’s exposure to NVDA is impacted by NVDA’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to NVDA at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to NVDA increases on days when NVDA is volatile near the close of the trading day.

NVIDIA Corporation Investing Risk — NVIDIA Corporation faces risks associated with meeting the evolving needs of its large markets – gaming, data center, professional visualization and automotive – and identifying new products, services and technologies; competition in its current and target markets; changes in customer demand; supply chain issues; manufacturing delays; potential significant mismatches between supply and demand giving rise to product shortages or excessive inventory; among other risks. 

Semiconductor Industry Risk – Semiconductor companies may face intense competition, both domestically and internationally, may have limited product lines, markets, financial resources or personnel and may face risks related to the availability of materials.

Information Technology Sector Risk — The value of stocks of information technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation, and competition, both domestically and internationally, including competition from competitors with lower production cost.

Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Concentration Risk, Market Risk, Non-Affiliation Risk, Security Volatility Risk and Cash Transaction Risk. Additionally, for the Direxion Daily NVDA Bear 1X Shares, Shorting or Inverse Risk.  Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.

Distributor: ALPS Distributors, Inc.

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