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Nvidia stock could rise by $298 billion in market value after its second-quarter earnings report.
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Goldman Sachs notes that options pricing data suggests Nvidia shares could rise 9% in either direction.
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“The bar for Nvidia this earnings season is a lot lower than in recent quarters,” Goldman said.
Nvidia could see a massive $298 billion share price swing after the company reported second-quarter earnings on Wednesday.
That estimate is based on recent options pricing data, Goldman Sachs’ trading desk said in a note Monday.
The potential swing in market value in either direction would amount to a more than 9% increase in the $3.17 trillion chipmaker’s stock price.
Nvidia holds the record for the largest one-day market cap swing, at $330 billion. The swing came in late July as the stock recovered from a painful weeklong decline.
According to the bank, if the company can report solid quarterly growth with even stronger prospects, it could surprise the stock market and trigger a major move.
“Can you imagine NVDA beating expectations on Wednesday?” asked Goldman Sachs’ trading desk, led by managing director Scott Rubner.
“Info Tech was net sold for the 4th straight week (13 of the last 16) and saw the largest net selling in 2 months as the sector was net sold in every region, driven by both long and short sales. The prime book is now underweight Info Tech versus the MSCI World Index at -9.7% – the lowest level on our list,” Rubner explained.
In other words, stock market positioning suggests that most investors could be surprised if Nvidia moves higher after Wednesday’s earnings.
“The bar for Nvidia this earnings season is much lower than in recent quarters given the sales fundamentals in the technology sector,” Rubner said.
Nvidia is currently the second largest company in the S&P 500, weighing in at around 6.5%, so the results could have a big impact on the broader market.
Steve Sosnick, strategist at Interactive Brokers, emphasized how important Nvidia is to the rest of the market.
In a post Tuesday, Sosnick analyzed the 25 most active trades on Interactive Brokers’ platform, more than 70 percent of which have some connection to Nvidia.
The top spot goes to Nvidia, followed by Tesla, a major customer of the chip company. AMD, Nvidia’s biggest competitor, is number three and number four is a semiconductor ETF.
According to Sosnick, of the 25 most active trades at Interactive Brokers, Nvidia is connected to 18 names.
“We’ve become accustomed to seeing NVDA top the charts most weeks, confirming its pivotal role in investor psychology. Looking further, it’s clear that the company plays a critical role in a wide range of other popular investment vehicles,” Sosnick said.
Read the original article on Business Insider
