Nvidia Surges 2.09% Amid AI Optimism and Buyback Boost – What’s Fueling the Rally?

Summary
• Micron’s Q1 results signal robust AI capex, lifting Nvidia’s shares.
• Nvidia’s $60B buyback program reinforces confidence in AI demand.
• Semiconductors sector rallies 1.49%, with AMD and Micron leading.

Nvidia’s stock surged 2.09% to $174.52, trading between $171.82 and $176.15, as Micron’s earnings confirmed AI spending resilience and Nvidia’s aggressive buyback signaled management’s conviction. The semiconductors sector mirrored the momentum, with AMD and Micron outperforming, while leveraged ETFs like NVDB jumped 4.73%. Traders now weigh whether this rally marks a sustainable rebound or a short-term bounce.

Micron’s Earnings and Buyback Signal AI Resilience
Nvidia’s intraday surge was catalyzed by Micron’s Q1 results, which showed $13.64B in revenue and $4.60 EPS, far exceeding expectations. Micron’s guidance for $18.7B in Q2 revenue and 67% gross margins confirmed that AI-driven demand for high-bandwidth memory (HBM) remains robust, alleviating fears of a slowdown. Simultaneously, Nvidia’s $60B buyback program—already returning $24.3B to shareholders—underscored its confidence in sustained AI infrastructure spending. These dual signals reassured investors that AI capex cycles remain intact, propelling NVDA’s shares above key resistance levels.

Semiconductors Sector Rally: AMD and Micron Lead Charge
The semiconductors sector gained 1.49%, outperforming the S&P 500’s 0.76% rise. AMD’s stock climbed 1.86%, while Micron surged 12.16%, reflecting broader optimism about AI-driven demand. Nvidia’s 2.09% gain aligned with sector momentum, though its 41.25x P/E remains elevated compared to the sector’s 24.34x average. The rally was fueled by Micron’s earnings and Nvidia’s buyback, with leveraged ETFs like NVDB (4.73% up) amplifying short-term volatility.

Options and ETFs to Capitalize on AI Optimism
• ProShares Ultra NVDA (NVDB): 4.73% gain, 527.73% leverage ratio
• Direxion Daily NVDA Bull 2X Shares (NVDU): 4.25% gain, 322.50% leverage ratio
• RSI: 37.57 (oversold), MACD: -2.89 (bearish), Bollinger Bands: $172.62–$187.94
• 200D MA: $156.92 (below current price), 30D MA: $183.60 (above current price)

Technical indicators suggest a short-term bounce after a bearish MACD and oversold RSI. Key levels to watch: $180.28 (middle Bollinger Band) and $179.98 (200D MA). Leveraged ETFs like NVDB offer amplified exposure to a potential rebound. For options, NVDA20251226C175 (strike $175, 29.69% IV, 41.20% price change) and NVDA20251226C177.5 (strike $177.5, 28.46% IV, 39.29% price change) stand out. Both have moderate deltas (0.476 and 0.352) and high gammas (0.049 and 0.048), making them responsive to price swings. Under a 5% upside scenario (target $183.24), NVDA20251226C175 would yield a $8.24 payoff, while NVDA20251226C177.5 would return $5.74. Aggressive bulls should target a break above $180.28, with NVDB as a leveraged play.

Backtest Nvidia Stock Performance
The backtest of NVDA's performance after a 2% intraday surge from 2022 to the present shows favorable results. The 3-Day win rate is 55.85%, the 10-Day win rate is 60.38%, and the 30-Day win rate is 65.47%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 15.53% over 30 days, suggesting that NVDA can deliver significant gains even after the initial 2% surge.

Bullish Setup Confirmed – Act on AI Resilience
Nvidia’s rally is underpinned by Micron’s AI capex confirmation and its $60B buyback, suggesting a sustainable rebound. Traders should monitor the $180.28 middle Bollinger Band and $179.98 200D MA for trend validation. The semiconductors sector’s 1.49% gain, led by AMD’s 1.86% rise, reinforces the AI narrative. A clean break above $180.28 would signal renewed momentum, with NVDB and NVDA20251226C175 as top plays. Watch for a breakdown below $171.82 to trigger a retest of the 200D MA.