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Nvidia stock could see a $298 billion swing in market value after its second-quarter earnings report.
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Goldman Sachs notes options pricing data suggests a possible 9% move in Nvidia’s stock in either direction.
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“The bar for Nvidia this earnings season is so much lower than it has been in recent quarters,” Goldman said.
Nvidia stock could see a large $298 billion swing in market value after it reports its second-quarter earnings results on Wednesday.
That estimate relies on recent options pricing data, in accordance with a Monday note from Goldman Sachs’ trading desk.
The potential swing in market value in either direction would equate to a greater than 9% move within the $3.17 trillion chip maker’s stock price.
Nvidia holds the record for the most important one-day market value swing at $330 billion, which occurred in late July because the stock rebounded from a painful weekslong decline.
In line with the bank, if the corporate can report a solid quarter of growth with even stronger forward guidance, it could catch the stock market by surprise and result in a giant move.
“Are you able to imagine if NVDA beats expectations on Wednesday?” Goldman Sachs’ trading desk, led by managing director Scott Rubner, asked.
“Info tech was net sold for the 4th straight week (13 of the last 16) and saw the biggest net selling in 2 months because the sector was net sold in every region, driven by each long and short sales. The prime book is now under-weight Info Tech vs. the MSCI World Index by -9.7% – at the bottom level on our record,” Rubner explained.
In other words, stock market positioning suggests that the majority investors might be caught off guard if Nvidia rises after its earnings results on Wednesday.
“The bar for Nvidia this earnings season is so much lower than it has been in recent quarters given fundamental selling in tech,” Rubner said.
Nvidia is currently the second-largest company within the S&P 500, with a weight of about 6.5%, so its results could have a big effect on the broader market.
Actually, Interactive Brokers strategist Steve Sosnick highlighted just how integral Nvidia is to the remaining of the market.
In a note on Tuesday, Sosnick analyzed the 25 most energetic trades on the Interactive Brokers platform, and greater than 70% of them have a connection to Nvidia.
The highest spot belongs to Nvidia, followed by Tesla, which is a key customer of the chip firm. AMD, Nvidia’s closest competitor, is number three, and number 4 is a semiconductor ETF.
Overall, of the highest 25 most energetic trades at Interactive Brokers, Nvidia is connected to 18 names, in accordance with Sosnick.
“We have gotten quite used to seeing NVDA atop the leaderboard most weeks, cementing its key role in investor psychology. Looking beyond that, it is sort of clear that the corporate plays a vital role affecting a big selection of other popular investment vehicles,” Sosnick said.
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