by Saqib Iqbal Ahmed
NEW YORK (Reuters) – Traders expect a big move in Nvidia shares following the semiconductor maker’s first-quarter earnings release on Wednesday, although volatility expectations are expected to be more muted than expected. in the past, US options markets show.
Options on Nvidia show the stock expected to move 8.7% one way or the other by Friday, according to data from options analytics firm Trade Alert.
This would translate into a change in the group’s market capitalization of $200 billion, an amount higher than the stock market value of around 90% of the companies making up the S&P 500.
This expected variation, certainly impressive by most criteria, remains lower than the 16.4% jump recorded by Nvidia shares after the publication of results for the fourth quarter of 2023. It is also less marked than the average increase in 12% calculated by traders over the last eight quarters.
“Volatility and expectations were much higher last time,” comments Chris Murphy, co-head of derivatives strategy at Susquehanna Financial Group.
INCREASE IN TITLE OF NEARLY 90% IN 2024
Nvidia stock, up around 87% since the start of the year, is considered a good indicator of the artificial intelligence (AI) sector, which is considered very promising.
The Santa Clara, California-based group’s market capitalization currently stands at around $2.3 trillion, making it the third most valuable company on Wall Street, behind Microsoft and Apple. Wall Street analysts are counting on an exceptional quarter for Nvidia, while in recent months the craze for the chip specialist has spread to other groups exposed to the AI theme.
“The benefits of AI extend to energy, raw materials and utilities (community services),” underline BofA strategists in a note, including Gonzalo Asis.
“It’s not just about Nvidia anymore,” they add
BofA expects Nvidia to account for 9% of the S&P 500’s earnings growth over the next 12 months, up from 37% over the past 12 months.
This does not mean that the next publication of the company’s accounts will not have an impact on the share price.
Matt Amberson, founder of ORATS, an options analytics services platform, said options’ implied volatility suggests options traders aren’t ruling out the possibility of further upside in Nvidia stock. , despite its already considerable gains since the start of the year.
“Traders expect upward movements to be as violent as downward movements,” he said.
In the January-March period, Nvidia is expected to post earnings of $5.59 per share on revenue of $24.65 billion, compared with sales of $7.19 billion in the same period ago. one year, according to LSEG data.
Steve Sosnick, chief strategist at Interactive Brokers, said a disappointment in Nvidia could test investors’ resolve on the prospects of AI.
“Yes, the rally has broadened, but I am not sure of its strength if (the title) Nvidia were to be sold massively,” he declared, adding nevertheless that the AI market is very important.
(Reporting Saqib Iqbal Ahmed, Claude Chendjou, editing by Kate Entringer)
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