Prediction: Nvidia's Shares Will Fall for a 5th Consecutive Quarter After Reporting Earnings on Aug. 26

Nvidia is set to report fiscal Q2 results after the close Aug. 26, with Wall Street expecting sales up 97% to just over $92B and another large EPS beat (10 of 11 quarters, averaging nearly $0.06 above consensus). Despite this, the article notes NVDA has fallen on the following trading day in 6 of the last 8 earnings reports, arguing expectations may be “too lofty” and leading to a likely continued post-earnings pullback.

Analysis

This is a positioning event more than a fundamental one. In crowded AI leadership, the first-order number can be strong while the second-order reaction is a de-rating if the guide or margin bridge is merely good rather than exceptional. The market is paying for scarcity, not just growth, so any hint that customer in-sourcing, capacity normalization, or mix shift is reducing Nvidia’s pricing power can matter more than another EPS beat.

The cleaner relative winner is TSM if backend capacity remains tight and Nvidia’s demand stays healthy, because TSM monetizes the build-out regardless of whose silicon wins the socket. But if Nvidia signals supply is easing faster than demand, that is bearish for NVDA’s multiple and only modestly positive for the broader AI chain, because it implies future ordering can be delayed without breaking end-demand. That dynamic would likely ripple into SMH/SOXX and the megacap capex basket over 1-3 months if investors conclude AI spending is moving from emergency procurement to more disciplined budgeting.

The contrarian point is that the consensus may be focused on the wrong variable: not revenue beat size, but 2025-2026 margin durability and the rate of customer internalization. Over 6-18 months, the risk is not an AI demand collapse; it is normalization of returns on deployed capital, which compresses the multiple before the earnings line fully rolls over. Falsification would be a materially raised forward guide, stable-to-higher gross margin, and evidence that Blackwell/next-gen ramps are still supply-constrained rather than merely well-absorbed.

Key Decisions for Investors

• Avoid initiating fresh NVDA longs into the print; if already long, trim 20-30% ahead of earnings and use any post-report gap up that fails to hold for 2-3 sessions as a de-risking opportunity.
• For event convexity, buy a 1-2 week NVDA put spread sized small enough that the premium is the max loss; thesis fails if NVDA gaps up >8% and holds above the post-earnings high through the following week.
• Relative-value idea: long TSM / short NVDA for a 1-3 month horizon if management commentary implies continued supply easing or customer chip internalization; stop if NVDA raises FY margin guidance or TSM disappoints on capex-related commentary.
• If NVDA prints only a modest beat with no guide raise, consider shorting SMH or SOXX on the first intraday bounce as a factor unwind trade; risk/reward improves if implied volatility is crushed but follow-through buying is absent.
• Set an alert for guidance on 2025 gross margin and data-center backlog conversion; that is the key falsifier for the 'post-earnings fade' setup, not the headline EPS beat.