Quiver Quantitative - As Nvidia (NVDA) prepares to release its earnings report on February 21, the U.S. equity options market is abuzz with anticipation, predicting a significant impact on the company's share price. Nvidia, a leader in the AI chipmaking industry, has seen a remarkable 50% increase in its stock value this year. Options traders are bracing for a potential 11% swing in the stock price post-earnings, based on data from ORATS. This expected fluctuation is the largest in three years and significantly surpasses Nvidia's average earnings move of 6.7% in the same period. With a towering market capitalization of $1.8 trillion, such a move could equate to a staggering $200 billion change in market value, surpassing the total market capitalization of major players like Intel (NASDAQ:INTC).
The anticipation surrounding Nvidia's earnings has led to a surge in options trading activity, with more than 750,000 Nvidia options traded by midday on Thursday, making it one of the most actively traded stocks in the options market. The persistent demand for upside options bets on Nvidia is evident, with the stock's 90-day 25 delta call skew reaching a five-year high. This sentiment indicates that investors remain optimistic about Nvidia's growth potential, despite the stock's recent surge. Analysts at Susquehanna Financial Group note the heightened call skew as a sign of investor confidence in Nvidia's future prospects, with many turning to upside calls for lower-risk exposure.
Market Overview: -Nvidia stock could swing 11% in either direction, potentially exceeding $200 billion market value change. -Demand for bullish options remains high despite 50% year-to-date rally, reflecting potential for further upside. -Earnings exceeding expectations crucial to maintain investor confidence and AI rally.
Key Points: -Nvidia's upcoming earnings report holds immense weight for the company, the market, and the AI sector. -Large projected stock movement highlights investor anticipation and potential volatility. -Bullish options demand suggests continued faith in Nvidia's growth trajectory.
Looking Ahead: -Impact of Nvidia's earnings on its own stock price and broader market sentiment. -Scrutiny of analyst expectations and potential implications of exceeding or falling short. -Repercussions for the AI sector and other chipmakers depending on Nvidia's performance. -Monitoring of investor sentiment and options activity following the earnings release.
Nvidia's ascension to becoming the third most valuable U.S. company, overtaking Alphabet (NASDAQ:GOOGL), is a testament to its dominance in the AI sector. Analysts expect the chipmaker to report earnings of $4.56 per share, with a significant increase in quarterly revenue to $20.378 billion from $6.05 billion a year earlier. These projections reflect the high expectations set for Nvidia's performance, fueled by its leading role in the AI and semiconductor industries.
The upcoming earnings report is not just a financial update; it's a crucial moment for Nvidia and its investors. It will either validate the optimism surrounding the company's growth trajectory in AI and chip manufacturing or bring a reality check to its soaring market valuation. As the market waits with bated breath, Nvidia's performance will not only influence its stock but also send ripples across the tech and AI sectors.
This article was originally published on Quiver Quantitative