NVIDIA Earnings Countdown... "Market Cap to Fluctuate Around $200 Billion"

According to an analysis, the market capitalization of US semiconductor company Nvidia, which has been leading the artificial intelligence (AI) rally, could fluctuate by $200 billion (approximately 267 trillion KRW) depending on its earnings performance.

[Image source=Reuters Yonhap News]

On the 20th (local time), Bloomberg reported that an analysis of stock market option positioning for Nvidia, which will release its earnings after the market closes the next day, indicated that the prices of call (buy) and put (sell) options suggest the company's stock price could move by 10.6%. This implies that Nvidia's market cap could fluctuate by as much as $180 billion. This figure is comparable to Meta Platforms, which holds records for both the largest decline and increase in market cap.

Private equity firm Susquehanna International Group also estimated a 25% probability that Nvidia's stock price will move outside the $620 to $850 range in the options market. This means the stock price could drop by 15% or surge by 17%.

The report stated, "Investors are preparing for increased volatility," adding, "Nvidia has contributed 30% of the S&P 500 index's gains this year, so its volatility is likely to impact the broader stock market." Nvidia, which supplies over 90% of the world's high-value-added semiconductors such as graphics processing units (GPUs) used in AI development, is considered the biggest beneficiary of the AI boom.

Christopher Jacobson of Susquehanna Group conveyed the FOMO (Fear Of Missing Out) sentiment surrounding Nvidia, saying, "Some investors are hesitant to buy more, but at the same time, they fear missing out on further gains."

On the day, Nvidia's stock fell more than 4% in the New York stock market ahead of its earnings announcement, causing the S&P 500 index to close lower. Due to the stock price decline, Nvidia's market cap ($1.715 trillion) evaporated by $78 billion, dropping it to 5th place behind Alphabet ($1.759 trillion) and Amazon ($1.735 trillion). Options trading was cited as one of the reasons behind this downward trend.

Some market participants argue that Nvidia's recent strong earnings expectations were already priced into the stock, causing it to rise excessively. In a report released that day, Bank of America (BoA) stated, "One interpretation of Nvidia's movement is a mix of fear and greed," and evaluated that "investors are indiscriminately chasing everything related to AI." On the other hand, CNBC's Jim Cramer said, "I am still a believer," and argued, "Nvidia has a price at which it can be fairly valued."

Nvidia will release its earnings after the market closes on the 21st. The key will be the future earnings guidance disclosed along with the results. According to LSEG, Wall Street expects Nvidia's revenue to increase by 240% year-over-year to $20.6 billion. Net income is estimated to surge more than sevenfold from $1.41 billion in the same period last year to $10.5 billion.

This content was produced with the assistance of AI translation services.