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As Nvidia prepares to release its earnings report on Wednesday, traders are bracing for a significant market response. The options market indicates an anticipated 8.7% swing in Nvidia’s shares by Friday, a move that could result in a market cap fluctuation of $200 billion, a figure larger than the market capitalization of most S&P 500 companies.
Moderate Volatility Compared to Previous Quarters:
While the projected swing is substantial, it falls short of the 16.4% surge recorded after Nvidia’s most recent quarterly earnings report.
Additionally, it is less aggressive than the average 12% move anticipated by traders in the last eight quarters, signaling slightly more muted expectations this time.
With an impressive 87% year-to-date growth and a market value of $2.3 trillion, Nvidia is viewed as a key player in the AI industry. As the third-largest company on Wall Street, it is expected to deliver a robust quarterly report, with investors betting on outstanding performance.
Broadening Impact of AI Theme:
The influence of AI extends beyond Nvidia, affecting sectors such as power, commodities, and utilities.
Analysts predict Nvidia will contribute 9% to the S&P 500 earnings growth over the next 12 months, compared to 37% in the previous 12 months, highlighting the company’s enduring significance.
Expectations of Eventful Earnings Report:
Despite Nvidia’s substantial year-to-date gains, options traders remain cautious. Implied volatility for out-of-the-money calls and puts indicates equal anticipation for the stock’s upside and downside potential.
Analysts expect Nvidia to report earnings of $5.59 per share, accompanied by a significant rise in quarterly revenue to $24.65 billion from $7.19 billion a year ago.
Impact on Broader AI Trade:
A sharp downturn in Nvidia’s shares could challenge investor confidence in the broader AI trade, with significant implications for market sentiment and sector performance.
Depending on Nvidia’s earnings performance and subsequent market reaction, the strength and stability of the AI theme may face scrutiny.
