Market Braces for Historic Swing in Nvidia’s Market Value
As the world waits with bated breath for Nvidia’s quarterly results, options traders are gearing up for a potentially record-breaking $292 billion swing in the chipmaker’s market value. This massive shift, equivalent to the market capitalization of about 95% of S&P 500 constituents, would be one of the largest ever seen.
A History of Post-Earnings Surprises
Historically, Nvidia’s post-earnings moves have undershot market expectations, but when they do surprise, it’s often to the upside. According to ORATS founder Matt Amberson, of the last 12 quarterly earnings reports, five post-earnings moves have been outside what was expected by the market, and all of those saw the stock price increase.
Traders Bet on an Upside Surprise
This time around, traders are assigning a slightly higher probability to an outsized move to the upside than to the downside, according to Christopher Jacobson, a strategist at Susquehanna Financial Group. With Nvidia at the heart of the generative artificial intelligence boom, its results could be a key factor in determining the market’s trajectory.
Investors Turn Focus to Nvidia
After a post-U.S. election rally that has stalled in recent days, investors are shifting their attention to Nvidia. The S&P 500 is up 23% year-to-date, despite a decline last week. As Nancy Tengler, CEO and chief investment officer at Laffer Tengler Investments, noted, “The market will extrapolate whatever Nvidia says to the entire AI trade.”
Can Nvidia Overcome Challenges?
Nvidia has consistently beaten Wall Street revenue expectations for the past eight quarters, but with analysts expecting a slower pace of growth, how the company addresses delays and supply-chain issues will be crucial for its stock price. The chipmaker is expected to report third-quarter sales surging 82.8% to $33.13 billion.
Nvidia Shares Down Ahead of Earnings
On Monday, Nvidia shares finished down 1.3% to $140.15. Despite this, the stock is up about 180% for the year, making it one of the top performers in the S&P 500 index. As the market holds its breath for Nvidia’s quarterly results, one thing is certain – the outcome will have far-reaching implications for the AI trade and the market as a whole.
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