Nvidia Traders Brace for Potential $300 Billion Earnings Move
Wednesday, Nov 20, 2024 10:09 am ET
2min read Nvidia (NVDA) traders are gearing up for a potential $300 billion earnings move, as the company prepares to report its fiscal third-quarter results on Wednesday, November 20. The options market is implying a significant swing in Nvidia's market value, with a potential eight percent move in either direction, totaling nearly $300 billion. This massive swing would be larger than all but 25 companies in the S&P 500 Index.
The anticipation surrounding Nvidia's earnings is driven by its dominance in AI chips and the market's anticipation of strong results. Nvidia's AI chips power generative AI, with a market share of up to 95%, making the company a bellwether for the AI sector. The options market assigns more risk around Nvidia's earnings than key economic data like inflation and jobs reports, indicating traders' heightened expectations and potential volatility.
Analysts' expectations for Nvidia's fiscal fourth quarter revenue range from $37.1 billion to over $44 billion, a spread of more than $7 billion. This wide gap reflects varying views on the demand for Nvidia's new Blackwell chips and the potential impact on revenue. The options market implies a potential eight percent move in Nvidia shares the day after earnings, which could equate to a $300 billion swing in market value. This significant implied move highlights the uncertainty surrounding Nvidia's earnings and the potential impact on the broader market.
Nvidia's guidance for the current quarter is expected to be around $32.5 billion, which may fall short of the $33-34 billion range needed to satisfy investors, as per Morgan Stanley. This could contribute to the significant implied move in Nvidia's stock price, with options implying an 8% swing in either direction, totaling nearly $300 billion. The market's heightened sensitivity to Nvidia's results, as it accounts for 20% of the S&P 500's total returns over the past year, may exacerbate this reaction.
Market dynamics, such as the recent easing of post-election euphoria and heightened single-stock fragility, have led to increased volatility in Nvidia's stock price. According to Bank of America's derivatives analyst Gonzalo Asis, the options market implies a potential 12.5% move in Nvidia's stock price following its earnings release, higher than the expected moves for key economic data like the employment and inflation reports. This suggests that traders are bracing for significant volatility in Nvidia's stock price, with the potential for a $300 billion swing in market value.
Nvidia's earnings performance significantly influences investor sentiment and market volatility. Over the past year, Nvidia accounted for 20% of the S&P 500's total returns, and its earnings are expected to drive nearly 25% of the S&P 500's EPS growth in the third quarter. The options market implies a potential 1.05% move in the S&P 500 following Nvidia's earnings report, higher than expected moves from key economic data like employment and inflation reports. Nvidia's stock itself is expected to move by 12.5% on the day of the earnings release, highlighting the company's outsized influence on market sentiment and volatility.
In conclusion, Nvidia traders are bracing for a potential $300 billion earnings move, with the options market implying a significant swing in the company's market value. The anticipation surrounding Nvidia's earnings is driven by its dominance in AI chips and the market's heightened expectations. The wide spread in analyst expectations and the potential impact on the broader market underscore the importance of Nvidia's earnings report. As traders await the results, they are preparing for potential volatility and a significant move in Nvidia's stock price.
The anticipation surrounding Nvidia's earnings is driven by its dominance in AI chips and the market's anticipation of strong results. Nvidia's AI chips power generative AI, with a market share of up to 95%, making the company a bellwether for the AI sector. The options market assigns more risk around Nvidia's earnings than key economic data like inflation and jobs reports, indicating traders' heightened expectations and potential volatility.
Analysts' expectations for Nvidia's fiscal fourth quarter revenue range from $37.1 billion to over $44 billion, a spread of more than $7 billion. This wide gap reflects varying views on the demand for Nvidia's new Blackwell chips and the potential impact on revenue. The options market implies a potential eight percent move in Nvidia shares the day after earnings, which could equate to a $300 billion swing in market value. This significant implied move highlights the uncertainty surrounding Nvidia's earnings and the potential impact on the broader market.
Nvidia's guidance for the current quarter is expected to be around $32.5 billion, which may fall short of the $33-34 billion range needed to satisfy investors, as per Morgan Stanley. This could contribute to the significant implied move in Nvidia's stock price, with options implying an 8% swing in either direction, totaling nearly $300 billion. The market's heightened sensitivity to Nvidia's results, as it accounts for 20% of the S&P 500's total returns over the past year, may exacerbate this reaction.
Market dynamics, such as the recent easing of post-election euphoria and heightened single-stock fragility, have led to increased volatility in Nvidia's stock price. According to Bank of America's derivatives analyst Gonzalo Asis, the options market implies a potential 12.5% move in Nvidia's stock price following its earnings release, higher than the expected moves for key economic data like the employment and inflation reports. This suggests that traders are bracing for significant volatility in Nvidia's stock price, with the potential for a $300 billion swing in market value.
Nvidia's earnings performance significantly influences investor sentiment and market volatility. Over the past year, Nvidia accounted for 20% of the S&P 500's total returns, and its earnings are expected to drive nearly 25% of the S&P 500's EPS growth in the third quarter. The options market implies a potential 1.05% move in the S&P 500 following Nvidia's earnings report, higher than expected moves from key economic data like employment and inflation reports. Nvidia's stock itself is expected to move by 12.5% on the day of the earnings release, highlighting the company's outsized influence on market sentiment and volatility.
In conclusion, Nvidia traders are bracing for a potential $300 billion earnings move, with the options market implying a significant swing in the company's market value. The anticipation surrounding Nvidia's earnings is driven by its dominance in AI chips and the market's heightened expectations. The wide spread in analyst expectations and the potential impact on the broader market underscore the importance of Nvidia's earnings report. As traders await the results, they are preparing for potential volatility and a significant move in Nvidia's stock price.
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