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Traders Anticipate Sharp Movement in Nvidia Stock Ahead of Earnings Report

Aug 28, 2024
  1. Expected Volatility Post Earnings Report
  2. Impact of Nvidia's Stock on Broader Market Trends
  3. Delays in Blackwell AI Platform

Traders in the U.S. equity options market are bracing for a significant shift in Nvidia’s (NVDA) stock following its upcoming earnings report. The expected shift may lead to more than $300 billion in the market capitalization of the world’s largest AI chip manufacturer.

Expected Volatility Post Earnings Report

According to ORATS, the option pricing model predicts a 9.8% volatility of Nvidia’s shares after earnings. This is the highest predicted movement in the stock in over three years. At present, Nvidia’s market capitalization is $3.11 trillion, and the 9.8% fluctuation would mean about $305 billion.

Impact of Nvidia's Stock on Broader Market Trends

As such, it has been pointed out that this could be the biggest market shift associated with earnings for any company in history. This would be twice the market capitalization of 95% of the S&P 500 companies, including giants such as Netflix Inc and Merck & Co. Nvidia’s stock performance has significant implications for the overall market. Nvidia has been one of the most significant performers in the S&P 500 index this year, with shares rising by approximately 150%. 'It’s the Atlas holding up the market,' said Steve Sosnick, chief strategist at Interactive Brokers, explaining the importance of Nvidia for the market. Susquehanna Financial analysis reveals that there is a 7% possibility of Nvidia’s stock increasing by more than 20% by Friday, while the possibility of the stock decreasing by the same margin is only at 4%. This signifies that traders are more worried about not making profits in the next uptrend than being on the wrong side of a big move.

Delays in Blackwell AI Platform

Earlier this month, Nvidia’s stock fell after reports that its Blackwell AI platform had design issues that could affect its delivery time by at least three months. Nvidia’s CEO, Jensen Huang, had earlier mentioned in the first-quarter earnings call that Blackwell would start launching in the second quarter, pick up pace in the third, and reach the customers in the fourth quarter. Huang also said that the company anticipates recognizing revenue from Blackwell this year. Blayne Curtis, the head of U.S. semiconductors at Jefferies, said similar things in a note. The note noted that the Blackwell delays are not a 'material setback' to Nvidia’s competitive positioning or its outlook for 2025. Overall, the company’s trajectory remains positive due to the high demand for AI chips.

The anticipated volatility in Nvidia’s stock post-earnings report is a significant event for the market. The company’s impact on the broader market is considerable, and despite temporary delays in the release of the Blackwell AI platform, Nvidia’s outlook remains positive thanks to the strong demand for its innovative technologies.

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