(Bloomberg) — Now Nvidia Corp. will report an unusually complex quarter as the world’s most valuable company, traders are preparing for a potentially massive stock swing.
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The options-implied move for Nvidia stock the day after earnings is about 8% in either direction, according to data compiled by Bloomberg. That would represent a swing in market value of nearly $300 billion – larger than all but 25 companies in the S&P 500 Index. And according to Bank of America strategists, the report poses more risk to the benchmark than the next Federal Reserve meeting or inflation numbers.
As the poster child for artificial intelligence trading, Nvidia shares are up nearly 200% so far in 2024 and the reports have been the biggest event on the earnings calendar for more than a year. Shares fell 1.9% on Wednesday ahead of the chipmaker’s fiscal third-quarter results, which come after markets close, and there is more uncertainty than usual about how the results and expectations will play out.
That’s because there are varying opinions on Wall Street about what to expect from the company’s newest product line, Blackwell. Nvidia has said the new chips will contribute several billion dollars in revenue in the fiscal fourth quarter, while Chief Executive Officer Jensen Huang described demand for the chips as “insane.” But production delays have made supply modeling – a notoriously difficult task – even more difficult.
“There is significant uncertainty surrounding Blackwell’s capacity,” said Dan Eye, chief investment officer at Fort Pitt Capital Group. “The CEO has built a lot of credibility, but the bar is very high,” he said, adding that it will likely be a challenge for Nvidia to deliver a huge blow for the next quarter.
The questions surrounding Blackwell have led to a wide spread in analysts’ expectations for the fiscal fourth quarter ending in January. The consensus is $37.1 billion – with the gap between the highest and lowest forecasts exceeding $7 billion, according to Bloomberg estimates. Nvidia usually provides revenue guidance for the coming quarter with its results.
Part of the reason for the difference in analyst forecasts is that some expect customers will delay purchasing Blackwell’s predecessor products, called Hopper, while waiting for the newer chips.