Options traders are preparing for a potential $288 billion swing in Nvidia’s (NVDA) market value after the company announces its second-quarter earnings results, which are set to be released after markets close on Wednesday. Based on options pricing, traders expect Nvidia’s stock to move roughly 6.5% in either direction after the report. Interestingly, that’s slightly below the chipmaker’s long-term average post-earnings move of 7%, which suggests that investors may feel more confident in their expectations as Nvidia’s business becomes more predictable.
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Still, analysts say that the broader market’s reaction to Nvidia’s report could be just as important as the stock’s own movement. “The ripples out of Nvidia might be more interesting than the actual move for Nvidia,” said Chris Murphy, who is the co-head of derivatives strategy at Susquehanna. While many speculative AI stocks have pulled back, Nvidia is trading just below its all-time high. As a result, if the company beats expectations, it could give a boost to smaller, beaten-down AI names.
It is worth noting that Nvidia has been a major force behind this year’s market rally, but tech stocks have cooled down slightly in recent weeks as investor enthusiasm dips. Traders are now watching to see if Nvidia’s $4.43 trillion market valuation can hold up, especially given its recent revenue-sharing deal with the U.S. government, which could affect guidance. Nevertheless, Nvidia shares are up about 35% year-to-date, while the S&P 500 (SPY) is up 10.8% this year.
What Is a Good Price for NVDA?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 36 Buys, three Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average NVDA price target of $199.94 per share implies 10.2% upside potential.
