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Nvidia earnings could spark a nearly $300 billion swing in the stock, Goldman says
By Matthew Fox,
4 hours ago
NVIDIA's CEO Jensen Huang displays products on-stage during the annual Nvidia GTC Artificial Intelligence Conference at SAP Center in San Jose, California, on March 18, 2024.
JOSH EDELSON/Getty Images
Nvidia stock could see a $298 billion swing in market value after its second-quarter earnings report.
Goldman Sachs notes options pricing data suggests a potential 9% move in Nvidia's stock in either direction.
"The bar for Nvidia this earnings season is a lot lower than it has been in recent quarters," Goldman said.
According to the bank, if the company can report a solid quarter of growth with even stronger forward guidance, it could catch the stock market by surprise and lead to a big move.
"Can you 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 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 under-weight Info Tech vs. the MSCI World Index by -9.7% - at the lowest level on our record," Rubner explained.
In other words, stock market positioning suggests that most investors could be caught off guard if Nvidia rises after its earnings results on Wednesday.
"The bar for Nvidia this earnings season is a lot lower than it has been in recent quarters given fundamental selling in tech," Rubner said.
Nvidia is currently the second-largest company in the S&P 500, with a weight of about 6.5%, so its results could have a big impact on the broader market.
In fact, Interactive Brokers strategist Steve Sosnick highlighted just how integral Nvidia is to the rest of the market.
In a note on Tuesday, Sosnick analyzed the 25 most active trades on the Interactive Brokers platform, and more than 70% of them have a connection to Nvidia.
The top 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 four is a semiconductor ETF.
Overall, of the top 25 most active trades at Interactive Brokers, Nvidia is connected to 18 names, according to Sosnick.
"We've gotten quite used to seeing NVDA atop the leaderboard most weeks, cementing its key role in investor psychology. Looking beyond that, it is quite clear that the company plays a crucial role affecting a wide range of other popular investment vehicles," Sosnick said.
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