Is a pre-announcement plunge the precursor to pushing a stock higher?
The semiconductor sector leader and the tech titan fell by 17.83% and 9.96%, respectively, after cutting expectations ahead of their earnings results. However, interestingly enough, each stock has surged since that bad news was brought into the spotlight.
Apple has gained nearly 20% since its slump after the pre-announcement while Nvidia has marked an over 16% gain since its own estimate cuts.
However, what's most prescient for Nvidia watchers is the fact that Apple has seen more than half of that respectable gain since its Jan. 29 earnings report that barely beat its lowered bar.
The price action implies that flat is the new up and a beat is the new blowout.
Jim Cramer noted that Nvidia is in a position where many are wondering what bad news is left to break when it reports earnings Thursday evening, again in line with expectations of Apple on its earnings day.
"[Investors] feel like there's just no way that the company can possibly say anything worse than they already have," Cramer told Katherine Ross at the NYSE on Thursday morning.
The similarities for the company's pre-announcements do not begin and end with stock implications, however.
"We believe the sudden change in fortunes at both companies is due to China macro," Lynx Equity Strategies analyst KC Rajkumar said. "While that view may be consensus, and a slowing China economy is well understood, the immediate reason, we think, is not just slowing consumer demand, but changes in money flows."
Rajkumar drew a corollary from slumping iPhone sales against China Mobile's inability to accommodate inventory to Nvidia's crypto overhang, which he speculated is driven by a loss in "mining farms" that were essentially state-sponsored.
"Crypto-mining operations across the country may have come to a stand-still all at once, leaving NVDA management unprepared," he explained.
To be sure, Rajkumar was less than optimistic about the outlook for the alleviation of the crypto overhang.
"While the stock may bounce around and trade volatile in the near-term, we think over the medium term, the stock trades down further from current levels," Rajkumar forecast, breaking with the trend established by Apple.
What also makes Nvidia and Apple key parallels is their implication to the tech sector at large.
"In terms of shock value this puts NVDA in the same league as AAPL's Dec miss followed by a negative pre-announcement," Rajkumar pointed out. "NVDA and AAPL however occupy pole positions, bellwethers even, within the Tech sector; they tell you something about where parts of the Tech sector could be headed."
If his forecast for more volatility and possibly a persistent downtrend ahead is correct, that makes tech an even more complicated space to trade.
As such, all eyes will turn to Nvidia CEO Jensen Huang Thursday evening to make sure this trajectory can be better parsed and understood by all tech investors, not just Nvidia shareholders.