Nvidia hasn’t even reported earnings yet, and the board is already investigating Huang, setting off a wave of market anxiety. The typical retail investor reaction is to “see the news before the chart”: spot a headline about a governance review or scandal, and the first instinct is to sell, dumping their shares first and asking questions later. But Dan Niles is doing the opposite and adding to $NVDA. The way a veteran fund manager thinks really is on a different wavelength from retail investors. He isn’t focused on the emotional shock of a single news story, but on valuation, expectations, and positioning ahead of earnings. If the market has already priced in the worst-case scenario, that can actually set the stage for a relief rally once the bad news is out. For example, in the week before earnings, NVDA put-option trading and implied volatility often rise noticeably, suggesting that a lot of money is buying protection or betting on volatility. Retail investors see the news and sell shares, while institutions may hedge with options and add to their cash equity positions—their actions can look completely opposite.

The whale wallets I’m watching have been selling lately, and it’s not Nvidia they’re selling—it’s the second-tier stocks riding the AI hype the hardest. Once earnings come out, it’s immediately clear who’s swimming naked. This detail is crucial: when a true industry leader is investigated or called into question, capital doesn’t necessarily flee right away, because the company still has liquidity and a compelling narrative. But many second-tier AI stocks are the kind where “AI makes up less than 10% of revenue, yet the stock trades at 20 times sales.” If earnings show that core-business growth is only in the single digits and AI orders haven’t materialized, a 20% pullback or worse is often just the start. In recent days, some second-tier stocks have seen heavy trading without much price movement after positive announcements, while whale wallets have continued to move funds out. At its core, that’s an effort to dodge an earnings landmine ahead of time. The interesting part of earnings season isn’t the numbers themselves, but who can withstand the double hit of “scandal + earnings” and still come out standing. First, look at whether guidance has been cut. Second, see whether margins and orders can support the narrative. Third, see whether management can clearly address the governance issues on the earnings call. Even if the numbers beat expectations, vague guidance can still lead to a gap up that quickly fades. And even if the numbers are just okay, a clear explanation and steady cash flow can lead to a gap down followed by a rally. What are you seeing on your end? I’m watching how the first hourly candle after earnings closes—whether a gap up can hold, whether buyers step in after a gap down, and whether volume really picks up. That says more about whether investors believe in the story than the earnings headline itself.