A favorite of mine Nvidia (NVDA) - Get Report reports quarterly numbers tonight. Long the name? Hey, me too. How do we go about this? Do we follow the lemmings off the cliff and hope for the best? Do we act now to minimize any dent that we may see in our now-sizable gains in this name? You have to really love the sport, and love strategy. That's why they play chess in the National League, and checkers in the American League.
The focus tonight will be on the sale of graphics cards that are used in producing new forms of cryptocurrency. Exciting? Yes. We're pretty sure demand in this space has been robust. Forward guidance, though ... that's another question, given that these robust sales have probably already been priced in by the stock's incredible run since first-quarter earnings were released on May 9. This industry has the potential for classic boom-and-bust type forward-looking demand.
We also need to hear about machine learning and artificial intelligence. The latter of those two land us squarely on the doorstep of autonomous driving. Think there won't really be a significant need there? It's not about convenience, gang. It's about reducing overhead in the transportation industry. Oh, we're going there. Tesla's new model 3 electric cars are now produced with Nvidia supercomputers inside. Obviously this is at this point a growing business meant to enhance forward looking returns more than they can enhance any current numbers.
Speaking of the future, there is the new Volta chip, which is only available for pre-order at this time. That could actually have a suppressive impact upon second-quarter data, while pushing guidance for server growth higher toward year's end. It really does seem that Nvidia is in every pertinent segment of information technology. Did we miss anything? What was that? Gaming? Whoa, let's talk about gaming.
The gaming business drives roughly half of Nvidia's quarterly revenue. This segment includes the growing popularity of e-sports, and includes many of the same technology used in mining blockchain. Don't ask me. I don't play these games. I don't watch them. I am willing to invest in them.
- Consumers in Areas Served by Uber, Lyft May Purchase Fewer Cars
- Nvidia Appears Chipper, but I'm Cautious
The bottom line is that there is too much here to really go into depth in anything other than a face-to-face conversation. Let's defend ourselves. What I intend to do in this space is this. I am not buying puts for protection. I know that this "insurance" will save an investor on any given day, but it usually just withers one's profits. Not going there. I will likely ring the register on half of my long. This way I realize a nice gain, and I still have one toe in the water in case tonight's data produces a moon shot.
I will also likely try to produce some side revenue going into tonight's close by writing puts bearing a strike price at a significant discount to the last sale. Even with a last sale for the equity that closed above $172 last night, $155 Aug. 11 (tomorrow) puts went out at $1.29. That's not bad at all. The stock, however, will be volatile today. You do not want to swing early on this, and go to the beach for the afternoon. This is a last minute of the day kind of play.
Missed the entire NVDA run? Intel (INTC) - Get Report is making great strides in cloud computing, big data, artificial intelligence, and now with the acquisition of Mobileye (MBLY) , autonomous driving. Intel launched the Xeon Scalable server processor last month. This launch was the biggest ever for the firm in terms of early shipments. On top of that, Intel intends to launch another new product, a 10 nanometer based server chip prior to year's end. INTC only trades at 11 times forward looking earnings and pays a 3% dividend yield. Just saying.
Get Morning Recon delivered directly to your inbox each market day. Click here to sign up for e-mail delivery of Stephen "Sarge" Guilfoyle's Morning Recon, Jim Cramer's Daily Booyah! or other great free newsletters from TheStreet.
More of What's Trending on TheStreet: