AI Earnings Week: Trading Tech Volatility Around Nvidia's Make-or-Break Report

The artificial intelligence industry is approaching a critical juncture, as major technology companies are set to reveal their financial data, while market volatility creates independent trends that investors closely monitor. The upcoming earnings reports from Nvidia and other companies could demonstrate how the AI sector continues to experience increasing market segmentation.

TL;DR

• Nvidia is scheduled to report Q3 fiscal 2026 earnings after market close on Wednesday, 19 November 2025.

• Oracle has lost over one-third of its value since peaking in September 2024.

• Pre-earnings volatility could create various trading dynamics.

• The market is showing divergence between AI infrastructure and chip companies.

AI Sector Landscape: Nvidia vs Oracle Performance

The AI industry shows unstable market performance with notable divergence between market leaders and infrastructure providers. Just two months after Oracle's stock had its best day since 1992 (soaring 36% to a record), the company has since lost one-third of its value. The decline in AI infrastructure profitability is the primary reason for this stock price drop.

Meanwhile, Nvidia is scheduled to report its results for the third quarter of fiscal 2026 (which ended 26 October 2025) on Wednesday, 19 November 2025, after the market close, with the semiconductor company's consensus earnings per share forecast from 14 analysts at $1.23-$1.25. The market anticipates this report with heightened interest given Nvidia's central position in the AI ecosystem.

The AI sales division at Broadcom achieved 46% annual sales growth through its partnership with Meta and other hyperscale customers. The different segments of the AI market show varying levels of performance according to this market development. (Source: CNBC)

Pre-Earnings Volatility: Market Dynamics Explained

Volatility Patterns

The market shows potentially higher volatility during major earnings announcement periods. This may be because some traders take positions before news events that could affect market direction. The options market shows these expectations through higher implied volatility readings.

For the third quarter, Meta reported adjusted earnings of $7.25 per share on $51.24 billion in revenue and topped Wall Street’s estimates. The PE ratio of Meta Platforms reached 26.2 on November 13, 2025, indicating that investors view the company as fairly valued, despite its significant investment in AI. The valuation metric enables investors to understand how the market establishes value for artificial intelligence companies.

Sector Rotation Dynamics

The AI sector shows different rotation patterns which move between its various sub-segments:

• Chip manufacturers (like Nvidia and Broadcom)

• Infrastructure providers (like Oracle)

• AI application companies (like Meta)

Market segments react differently to changes in market conditions and new technological advancements.

Options Strategies: Straddles vs Strangles for Earnings

Understanding Straddles and Strangles

These strategies continue to be a topic of discussion among investors throughout the earnings reporting period.

• Straddles: A long straddle involves buying a call and a put for the same underlying stock and expiration date, with the same strike price. This strategy aims to potentially profit from significant price movement in either direction

• Strangles: In a long strangle, you buy both a call and a put for the same underlying stock and expiration date, with different exercise prices for each option. The call typically has a higher strike price than the put.

Still, the markets are volatile, and traders must recognise that there’s no single, definitive solution or strategy, as the markets can be unpredictable.

Key Differences:

• Strangles generally cost less than straddles due to the use of out-of-the-money options

• Strangles require larger price movements to become potentially profitable

• The maximum risk for both strategies is limited to the initial debit paid

Time Decay Considerations

Straddles and Strangles Options Contracts may face a significant risk factor because of time decay. The value of options decreases as expiration draws closer, especially when the stock price remains unchanged.

Implied Volatility Impact

Higher volatility may increase the probability of a favourable move for a long strangle position, but it may also increase the total cost of executing such a trade. Traders often observe implied volatility levels before and after earnings announcements.

Market Context and Historical Patterns

The S&P 500 index achieved a 24% increase in 2024, producing a 54% return over the two-year period, which marked its best market performance since 1998. The market expansion data indicate which business segments were successful, as reported by investors during this period.

Though past performance does not reflect future results, it may be worth noting that historical market trends reveal particular patterns of market behaviour.

• According to data from CNBC going back to 1980, the Nasdaq and other benchmark indices have historically risen in the months following a presidential election

• Multi-year technology rallies have historically shown certain momentum patterns

Pair Trading Strategy: AI Sector Applications

The trading strategy of pair trading requires investors to buy and sell two securities which show connected market behaviour. The AI sector enables traders to distinguish between these two market trends.

• Quality differentiation: Comparing companies with strong fundamentals versus those with operational challenges

• Sector rotation: Movement between hardware and software companies

• Geographic differences: U.S. versus international AI companies

These investment methods use market performance relative to other assets to make decisions instead of following specific price movements.

Current Valuations in Perspective

Different AI companies trade at varying valuation multiples:

• Meta stock trades at a forward price-to-earnings (P/E) ratio of 26.2, based on 2025 analyst estimates

• Oracle's recent decline has compressed its valuation metrics

• Nvidia's valuation reflects market expectations for continued AI growth

These disparities create different risk-reward profiles across the sector

Technological Shifts Impacting Trading

The AI ecosystem now focuses on inference operations because hyperscalers generate revenue primarily from inference operations, rather than training activities. The market transformation has distinct impacts, which can affect entities in this specific industry sector.

• Training-focused companies: The growth rate of these companies will likely experience a slowdown.

• Inference-optimised solutions: The market demand for these solutions will likely rise.

• Hybrid providers: The two market trends will create opportunities for hybrid providers to succeed.

Risk Factors to Monitor

The current market volatility results from multiple factors that influence it:

• The AI infrastructure providers may  face higher-than-expected margin challenges.

• The market faces restrictions due to limited chip supplies.

• The AI service market experiences growing competition between its providers

• The tech industry is facing potential policy changes, which could impact its operations.

Conclusion

The AI sector will experience a crucial period during the upcoming earnings week when Nvidia releases its November 19 financial report. The market shows distinct AI business model differentiation, as Oracle's stock value decreased by more than 30% since September, yet other market segments continue to grow. The market displays varying valuation levels, with Meta valued at 26.2 times forward earnings, in contrast to other segments, as the sector transitions from training to inference computing.

Investors can forecast market reactions during critical events by analysing earnings responses, which reveal option market behaviours and volatility patterns. The ongoing AI story maintains strong market interest in technology as investors monitor the current earnings season. 

* Past performance is not indicative of future results. The above are only projections and should not be taken as investment advice.