Nvidia Earnings Could Drive $200 Billion Swing in Shares, Options Indicate

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Traders are gearing up for significant movement in Nvidia’s shares following the chipmaker’s earnings announcement on Wednesday, with options markets indicating a substantial potential swing in its stock price. While expectations for volatility are somewhat subdued compared to previous instances, Nvidia’s options suggest an 8.7% fluctuation in either direction by the end of the week, according to data from Trade Alert.

This anticipated movement could result in a market capitalization swing of $200 billion, a figure larger than the market capitalization of approximately 90% of companies listed in the S&P 500 index. While considerable, this projected swing falls short of the 16.4% surge witnessed in Nvidia’s shares after its last quarterly earnings report and is also less aggressive than the average 12% move expected by traders in the past eight quarters.

Chris Murphy, co-head of derivative strategy at Susquehanna Financial Group, noted that volatility and expectations were notably higher during the previous earnings cycle. Despite this, Nvidia remains a focal point for investors, with its shares having surged approximately 87% year-to-date. As a leading player in the AI industry, Nvidia is closely watched as a bellwether, boasting a market value of about $2.3 trillion, positioning it as the third-largest company on Wall Street, trailing only Microsoft and Apple.

The market’s optimism extends beyond Nvidia itself, with investor interest spreading to other companies benefiting from the AI trend. BofA strategists, including Gonzalo Asis, highlighted the broadening impact of AI across various sectors, including power, commodities, and utilities, signaling a growing recognition of AI’s transformative potential beyond Nvidia’s sphere of influence.