Key facts
- Options traders are pricing in a $280 billion market value swing for Nvidia following its second-quarter earnings report.
- The implied move is 5.4% in either direction, a decrease from the 6.5% implied before the May earnings report.
- This expected move is below Nvidia's historical average post-earnings swing of 7.4% over the past 12 quarters.
- Nvidia shares have declined for seven consecutive trading days but remain up 11.7% year-to-date.
- Broader market concerns include rising energy prices and U.S. government debt, which have increased Treasury yields.
Options traders are anticipating a significant market value swing for Nvidia following its upcoming second-quarter earnings report, with a potential move of approximately $280 billion. The options market is pricing in a 5.4% move in either direction for Thursday, a day after the company releases its results. This implied volatility is lower than the 6.5% move anticipated ahead of Nvidia's May earnings report and below its historical average post-earnings swing of 7.4% over the last 12 quarters.
Analysts suggest this indicates a degree of complacency and predictability surrounding Nvidia's performance, with the era of massive earnings surprises and double-digit stock rallies potentially behind it. Despite a recent seven-day decline, Nvidia shares have still gained 11.7% year-to-date, outperforming the broader S&P 500's 11.8% rise but lagging the Philadelphia SE Semiconductor index's 61% surge.
The broader market is currently experiencing unease due to rising energy prices and concerns over mounting U.S. government debt, which have driven Treasury yields higher. The 30-year yield recently hit a 19-year high, prompting Treasury Department measures to ease market strains. This environment has negatively impacted growth and technology stocks, increasing focus on Federal Reserve Chair Kevin Warsh's upcoming speech for insights into the economic outlook and interest rate policy.
Investors will closely monitor Nvidia's revenue guidance, demand for its chips, and profit margins, particularly the continued capital spending by major cloud providers on AI infrastructure. As a dominant supplier of AI chips, Nvidia is seen as a bellwether for the entire AI sector. The company's recent partnerships to finance AI infrastructure underscore the substantial investment required in data centers.