As Wall Street braces for Nvidia’s (NVDA) upcoming earnings report, traders in the U.S. equity options market are expecting nothing short of a seismic shift in the stock market.
The world’s most dominant artificial intelligence chipmaker, Nvidia, is poised to spark a potential $300 billion swing in its share value, making headlines and rattling investors across the globe.
The buzz around Nvidia’s earnings is palpable. Options pricing reveals that traders are anticipating a massive 9.8% move in the company’s shares on Thursday, just one day after the earnings report is released, according to data from analytics firm ORATS. To put this in perspective, this projected move surpasses any expected shift ahead of Nvidia’s earnings over the past three years and significantly exceeds the stock’s average post-earnings movement of 8.1% during that period.
To understand the magnitude of this potential move, consider Nvidia’s current market capitalization of approximately $3.11 trillion. A 9.8% swing would translate to about $305 billion—likely the largest expected earnings-related market shift for any company in history. To put it bluntly, such a swing would dwarf the market capitalization of 95% of the S&P 500 constituents, including major players like Netflix and Merck, as per data from LSEG.
Nvidia’s influence extends far beyond its own stock. The company, whose chips are widely regarded as the gold standard in artificial intelligence, has been a major force driving the broader market. The stock has surged around 150% year-to-date, accounting for approximately a quarter of the S&P 500’s 18% gain this year. As Steve Sosnick, chief strategist at Interactive Brokers, aptly put it, “It’s the Atlas holding up the market.”
But there’s more to this story. Options pricing suggests that traders are more focused on the fear of missing out on a big upside move rather than worrying about a significant drop. According to a Susquehanna Financial analysis of options data, traders are assigning a 7% chance that Nvidia’s stock could surge more than 20% by Friday, while only a 4% probability is being given to the possibility of a 20% or greater sell-off.
This sentiment highlights the broader market’s confidence in Nvidia’s continued dominance in the AI sector. “(Ahead of earnings) people typically want to buy hedges, they want to buy insurance, but in Nvidia’s case, a lot of that insurance is FOMO insurance,” Sosnick noted, referring to the popular acronym for “fear of missing out.” In other words, investors are eager to ensure they don’t miss out on what could be a significant rally.
But why is this potential move so large? A significant factor is the volatility that has characterized Nvidia’s stock in recent months. Nvidia’s average 30-day historical volatility this year—a measure of how much the stock has fluctuated over a rolling 30-day period—is about twice the average of the same measure for other companies with market caps above $1 trillion, according to a Reuters analysis of Trade Alert data. This volatility underscores the uncertainty and optimism surrounding AI and the vast opportunities it presents, with Nvidia at the forefront of this technological revolution.
Christopher Jacobson, a strategist at Susquehanna Financial Group, which trades in Nvidia securities, explains that the options market is merely reflecting the reality of how the stock is behaving. “(It’s) just a function of continued uncertainty/optimism with regards to AI and the ultimate size of the opportunity coupled with NVDA having become such a widely followed stock among institutional and retail (investors),” he said.
As the world watches, Nvidia’s upcoming earnings report is set to be a defining moment not just for the company but for the entire stock market. With the potential to trigger one of the largest market swings in history, Nvidia is more than just a chipmaker—it’s a bellwether for the future of technology and the global economy. Investors, traders, and tech enthusiasts alike will be keeping a close eye on this earnings report, which could very well set the stage for the next big chapter in the AI revolution.
