Most Volatile Earnings Season Coming! What to Focus?
The market expects Q3 earnings growth of 8%, marking the 9th straight quarter of YOY gains.
But here’s the twist — historically, S&P 500 companies almost always beat estimates.
💡 In 37 of the past 40 quarters, actual earnings topped forecasts.
🔺 On average, actual EPS beats estimates by 7–8%.
📊 If that trend holds, Q3 earnings growth could easily exceed 13%, making it the 4th consecutive quarter of double-digit profit growth.
Actual earnings growth rate has exceeded the estimated earnings growth rate at the end of the quarter in 37 of the past 40 quarters for the S&P 500. The only exceptions were Q1 2020, Q3 2022, and Q4 2022.
Earnings season: Justify the truth for AI capital spending
In the upcoming earnings season, capital expenditures — especially those tied to artificial intelligence — will come under intense scrutiny. The key question: Can this massive spending be monetized?
Data shows that U.S. mega-cap companies are projected to spend $1.1 trillion on AI between 2026 and 2029, while total AI-related investment across all sectors is expected to exceed $1.6 trillion. This spending far surpasses the $309 billion in combined capital expenditures over the past 12 months by Mag 7 tech giants (excluding Tesla), most of which has already been poured into AI infrastructure.
For many companies, AI remains a cost center rather than a revenue driver. While this may not yet pose a major headwind, it could become one in the future. The market now stands at a crucial crossroads: on one side lies the boundless potential of AI-driven transformation; on the other, the profit and valuation pressure from massive capital outlays.
Options Strategy for This Earnings Season
With the VIX now above 23, volatility is pricey — and that flips the script. Last quarter, traders bought straddles when IV was cheap. This time, it’s all about selling volatility.
1️⃣ Sell Straddles / Strangles When options imply bigger moves than earnings usually deliver — it’s time to collect premium.
Ideal targets: Stocks with historically small earnings-day moves — think AAPL, MSFT, PG, KO, INTC.
IV collapses, theta pays.
2️⃣ Iron Condors for Safety Want to sell vol but limit risk?
Use an iron condor — sell the near strikes, buy wings for protection. You still profit from the IV crush, but your downside is capped.
When volatility is cheap, you buy it. When volatility is expensive, you sell it.
The key to success will be timing and selectivity:
Sell volatility right before earnings
Close positions immediately after results
And stay disciplined on risk — because in a season this volatile, complacency costs more than fear itself.
What would you focus on this earnings season?
Which company would be your pick?
How do you expect earnings growth & AI capex?
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My pick is $Microsoft(MSFT)$ and $NVIDIA Corp(NVDA)$ — both at the core of the AI ecosystem with clearer profit paths. In contrast, firms where AI remains a cost center could face margin pressure if ROI lags. I’ll also keep an eye on guidance revisions, as they’ll reveal whether optimism around AI spending is starting to cool.
With the VIX $Cboe Volatility Index(VIX)$ above 23, I’m leaning toward selling volatility via iron condors or strangles on stable names like $Apple(AAPL)$ or $Procter & Gamble(PG)$ . I expect Q3 earnings growth to exceed 13% again, but the real story is how firms guide future AI returns.
@Tiger_comments @TigerStars
Earnings season is important because public companies must disclose their financial health, revenues, expenses, profits and strategic direction. It is like a report card and it keeps management honest and accountable to their shareholders.
Share prices can swing dramatically based on earnings results. A beat or a miss can reshape investor sentiment, trigger sector rotations and even shift macro narratives.
This earnings season is even more important as the US government shutdown continues into its 3rd week and the geopolitical tensions between the US and China continue.
I will be focusing on the Magnificent 7 especially $NVIDIA(NVDA)$ and $Alphabet(GOOG)$ as I have a vested interest in them.
@Tiger_comments @TigerStars @TigerClub @CaptainTiger
Check them in the history - “community distribution“
NVIDIA (NVDA) remains a standout due to its leadership in AI chips and data center computing, with robust revenue growth expected。。。
AI-related capital expenditure is accelerating, supporting earnings growth despite economic and regulatory challenges
Market reactions will hinge on AI outlooks and related investment plans, with backlog visibility and product launches acting as key signals amid volatility
Tag :
@Huat99
@Snowwhite
I’d prioritise semiconductors, hyperscale cloud, and industrial automation — sectors where AI capex translates directly into earnings growth. Nvidia, AMD, and TSMC remain central, but watch for second-wave beneficiaries like Broadcom, Super Micro, and ASML.
In tech, I expect AI-related spending to stay robust, even as overall earnings growth moderates to mid-single digits. Firms that turn AI infrastructure into profitable services, Microsoft, Amazon, and Oracle, should outperform.
Elsewhere, I’d stay cautious on consumer cyclicals and rate-sensitive sectors until guidance confirms margin recovery.
My approach: sell volatility pre-earnings, take profits swiftly post-results, and keep tight stops. In this environment, discipline is alpha, not aggression.
我的逻辑是，在高IV（隐含波动）时期，市场已经提前为“剧烈波动”定价，哪怕财报结果不错，波动率回落（vol crush）也足以让卖方赚取时间价值的溢价。关键是控制风险——铁秃鹰能有效限制损失，同时仍能捕捉IV崩塌带来的利润空间。
我个人这季会关注NVDA、META和TSM这几只AI相关股。虽然AI资本支出依然高企，但市场对增长预期已经非常饱和。如果财报稍有不及预期，波动性卖方可能会笑到最后。总之，这个季度我不打算当英雄，宁愿稳稳赚溢价，也不冒险赌方向。
Not sure I can cope with more volatility. I’m going concentrate on buying good sold companies rather than making the trade.
Nvidia at a discount sounds great. As TSMC was beyond expectations, I’m sure many of their customers will be the same.
If I buy well when it all settles down I should be in a good place.
Interesting that the TSMC price fell post high earnings so all of that had been priced in.
How it works : Buy a Call at a lower strike price, sell a Call at a higher strike price.
If Google beats earnings but the market response is measured - say a 3% to 5% rise instead of 15% to 20%. This is a great scenario for a Bull Call Spread where you profit from moderate upside without chasing extremes.
A Bull Call Spread is also a potentially lower cost way to trade a moderately bullish view on a stock.
@Tiger_comments @TigerStars @CaptainTiger @TigerClub
1️⃣賣出跨式/絞殺當期權意味着比收益通常帶來的更大的變動時，就該收取溢價了。
數據顯示，美國大型企業預計將支出2026年至2029年間人工智能投入1.1萬億美元，而所有行業的人工智能相關投資總額預計將超過1.6萬億美元.這一支出遠遠超過3090億美元在Mag 7科技巨頭（不包括特斯拉）過去12個月的資本支出總額中，其中大部分已經投入到人工智能基礎設施中。
標普500過去40個季度中，有37個季度的實際盈利增長率超過了季度末的預期盈利增長率。唯一的例外是2020年第一季度、2022年第三季度和2022年第四季度。