Nvidia Earnings Report: Traders Brace for Historic $300 Billion Market Swing
By Saqib Iqbal Ahmed
NEW YORK (Multibagger) - The U.S. equity options market is abuzz with anticipation as traders gear up for Nvidia's (NASDAQ: NVDA) upcoming earnings report. Analysts predict a monumental $300 billion swing in the shares of the world's leading AI chipmaker.
Options data from analytics firm ORATS show that traders expect Nvidia’s stock to move approximately 9.8% on Thursday, following the earnings report. This is a significant deviation from Nvidia’s historical post-earnings move of 8.1% over the last three years, indicating heightened market expectations.
Given Nvidia's colossal market capitalization of about $3.11 trillion, a 9.8% movement translates to a staggering $305 billion—potentially the largest expected earnings move in history. This magnitude surpasses the total market capitalization of 95% of S&P 500 constituents, including industry giants like Netflix (NASDAQ: NFLX) and Merck (NASDAQ: MRK), according to LSEG data.
Nvidia’s chips are considered the gold standard in artificial intelligence, and the company’s performance has far-reaching implications for the broader market. Nvidia’s stock price has soared approximately 150% year-to-date, contributing significantly to the S&P 500’s 18% gain in the same period.
Steve Sosnick, Chief Strategist at Interactive Brokers (NASDAQ: IBKR), emphasized Nvidia's impact, stating, "It alone has been a huge contributor to the overall profitability of the S&P 500. It's the Atlas holding up the market."
Options pricing indicates that traders are more focused on the potential upside than the downside. Susquehanna Financial analysis reveals that traders assign a 7% probability to Nvidia’s stock rising more than 20% by Friday, compared to a 4% chance of a similar downside.
Steve Sosnick elaborated, "Ahead of earnings, people typically want to buy hedges and insurance, but in Nvidia's case, a lot of that insurance is FOMO insurance. They don't want to miss a rally."
Historically, Nvidia’s shares have been volatile, which partly explains the large expected move. According to Trade Alert data analyzed by Multibagger, Nvidia's average 30-day historical volatility this year is about twice that of other trillion-dollar companies.
Christopher Jacobson, a strategist at Susquehanna Financial Group, noted, "The options are just reflecting how the stock is actually moving. It’s a function of continued uncertainty and optimism regarding AI and Nvidia becoming a widely followed stock among both institutional and retail investors."
Breaking It Down: How This Affects You and Your Finances
What’s Happening?
Nvidia, a major player in the AI chip market, is about to release its earnings report. Traders are expecting a significant swing—around $300 billion—in its stock value, which could be one of the largest in market history.
Why It Matters
- Market Impact: Nvidia’s performance has a huge influence on the broader stock market, especially the S&P 500.
- Investment Opportunities: There’s a high probability of significant stock movement, making it a potentially lucrative trading opportunity.
- Volatility: Nvidia’s stock is known for its volatility, reflecting broader trends and developments in the AI sector.
Key Takeaways
- High Expectations: Traders are betting big on Nvidia’s earnings, with a nearly 10% expected move.
- Market Influence: A swing in Nvidia’s stock will likely affect the overall market, given its large market cap.
- Volatility: Nvidia’s historical volatility is higher than most trillion-dollar companies, indicating potential for large price movements.
Understanding these factors can help you make informed decisions about your investments and gauge the potential impact on the broader market. Whether you’re an experienced investor or just getting started, keeping an eye on Nvidia’s earnings report could provide valuable insights and opportunities.