On Thursday morning (May 23) Beijing time, American chip company Nvidia will release its performance report for the first quarter of the fiscal year 2025 as of April 28, 2024; A conference call will also be held at 05:00 in the morning.
On Monday, Nvidia closed up 2.49%, driving the Nasdaq to a new historical high, while the Dow Jones Industrial Average, excluding Nvidia, fell nearly 0.5%. As the backbone of the technology sector and even the entire US stock market, Nvidia's performance is an important indicator of artificial intelligence, to the extent that analysts at Goldman Sachs previously referred to it as "the most important stock on Earth.".
Currently, traders are pricing the potential volatility of Nvidia's stock price. According to data from option analysis company Trade Alert, the unilateral volatility of the stock may reach 8.7%, which is equivalent to a market value fluctuation of over 200 billion US dollars. This number is larger than the total market value of nearly 90% of companies in the S&P 500 index.
By conventional standards, the unilateral fluctuation of $200 billion is enormous. But judging from the performance of Nvidia's stock price after releasing financial reports in recent years, it can only be said to be average. According to Trade Alert calculations, the average expected first day volatility of traders over the past eight quarters is 12%.
On February 22 of this year, the first trading day after the last financial report was released, Nvidia's stock price surged by 16.4%, higher than Trade Alert's estimate of 13.8% at the time.
Chris Murphy, Co Head of Derivatives Strategy at Susquehanna Financial Group, a US investment firm, stated that both expected and actual volatility were quite high at the time.
On May 25, 2023, a year ago, Nvidia surged by 24.4% on the trading day after its financial report, which was more than twice the 10.9% expected by Trade Alert. However, at that time, the company's total market value had not yet exceeded $1 trillion, so when converted to market value, it was still slightly lower than the expected $200 billion.
Matt Amberson, founder of options analysis service company ORATS, pointed out that Nvidia's annual increase has been significant, but traders have not become too conservative. But Amberson added that traders expect the upward trend to be as dramatic as the downward trend.
As of Monday's close, Nvidia's stock price has returned to near historical highs, with a cumulative increase of over 91% since the beginning of the year and a market value exceeding $2.33 trillion. It is the third most valuable listed company in the world, second only to Microsoft and Apple. Wall Street has found that in addition to driving the upward momentum of software giants, Nvidia's influence is becoming increasingly widespread.
Bank of America strategists wrote in a report on Monday that the role of AI is expanding to include electricity, commodities, and utilities, and Nvidia no longer represents just one company. The bank expects Nvidia to drive an 11% profit growth in the S&P 500 index over the next 12 months, compared to a 37% increase in the past 12 months.
According to data from the London Stock Exchange Group (LSEG), the market expects Nvidia's quarterly revenue to increase from $7.19 billion a year ago to $24.65 billion, with earnings per share reaching $5.59.
Regarding this, Steve Sosnick, Chief Strategist at Yingtou Securities, stated that if the performance falls short of expectations, it may dampen the enthusiasm for AI concept trading.